Intel could and should double, Cramer said Wednesday, after last night’s stellar earnings report, which was driven by “the most impressive product cycle I can ever recall.”
How does he know? After 30 years on Wall Street, he’s seen this before.
Back in ’82, Intel launched its breakthrough 286 chip, businesses started buying PCs, and the stock doubled in a year. The 386 processor came in ’85, and INTC doubled 18 months later. PCs were becoming a household item in ’89 when Intel released its 486 chip, and it took just 16% for the stock to climb 100%. The Pentium chip hit the market in 1993 and 26 months later Intel had doubled again – then doubled once more 18 months after that when the Web took off. Then there was one more double once the Internet became a household utility.
“Now, suddenly, we have the first new sit-up-and-take-notice product cycle since that last Pentium-based double,” Cramer said. “And I think it's time that Intel’s stock reverts to the old pattern.”
He’s talking about the rise in PC sales thanks to Microsoft’s new operating system, Windows 7. He means the Intel chips in Apple’s Mac computers. Plus, the company’s exposure to Cramer’s favorite growth trend, the mobile Internet. And he doesn’t see this as just a consumer-driven cycle either. He’s expecting chip demand worldwide to hit the corporate market in the second of the year.
Oddly, though, Intel did nothing today, even despite that fantastic report. But that’s just an opportunity for investors to get in before the stock ramps, Cramer said. INTC’s trading at 12 times earnings? He thinks it should be 18, especially given that Intel’s chips aren’t just part of a PC replacement cycle. They’re being used in a ton of different applications.
“I am calling for a return of the Intel of old,” Cramer said. “Those who do not learn from Intel’s history are doomed to miss this move.”
Cramer’s charitable trust owns Apple and Intel.
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