Intel and the Autonomous Vehicle Market

03/29/2017 2:50 am EST


Jason Clark

Contributing Editor, The Prudent Speculator

Shares of Intel (INTC) fell after the semiconductor giant announced plans to acquire Mobileye (MBLY), a leader in autonomous car technology, for $15.3 billion. 

Intel believes that the deal, which is estimated to be immediately accretive, will accelerate the firm’s position as a leader in the highly and fully autonomous vehicle market. While the deal might make sense from a technological perspective, some analysts were not so pleased. 

We believe that Intel paid a rich price for Mobileye, perhaps even too rich given the alternative uses for the cash, but ultimately feel that Intel has to continue to invest to stay at the leading edge of technology. 

Rather than starting from scratch, these strategic acquisitions give the company the ability to build on a business that is already working, which we believe to be a long-run positive. 

All things considered, we have left our Target Price for INTC at $45 and we very much like the dividend yield of 2.9% and the trailing-12-month P/E ratio of 13.

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