I am assigning Intel (NASDAQ:INTC) a positive risk/reward rating based on its competitive advantage in research and development, the company’s aggressive capital investment strategy, and the vastly expanded opportunity set created as a result. Intel is mixing the essential ingredients for a once in a decade phase change to a higher growth profile. With traditional PC unit growth projected to be on par with smartphones through 2025, Intel’s largest business segment should continue to generate substantial free cash flow optionality. The low valuation provides the opportunity for a highly-skewed return profile to the upside offering an asymmetric risk/reward tradeoff.
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