Agrobot is on a mission. Based in Oxnard, Calif., the privately held firm wants to use a 3D camera and robotics to identify and pick the ripest berries, without damage – something human pickers find difficult when they’re working for hours on end.
Then there’s 12 Sigma Technologies, a San Diego firm that’s developing a system to sift through hundreds of medical images and create an “early warning system” for lung cancer – a deadly disease with a five-year survival rate of just 17%.
All three of these companies have one thing in common: Their projects all rely on artificial intelligence (AI), a new wave of technology that’s set to have a $15.7 trillion impact on the global economy.
Right now, fast and robust graphics processors are the main power behind AI.
But there’s a new advance in AI that could accelerate its adoption even as it revs up computer performance – and with good reason: This innovation operates at lightning speeds but just “sips” energy.
In fact, this “artificial” intelligence parallels the actual thinking pattern of the human brain.
Known as “neuromorphic computing,” this type of AI-powered “neural network” will find use in computer vision and speech and pattern recognition. According to researcher Gartner Group, this could become the predominant type of AI computing by 2025.
In short, we’re talking about game-changing innovation – one that’s being driven by a new kind of chip.
One specific company has leaped to the forefront. It’s a company whose shares are still trading at bargain levels.
Let’s take a look…
From the Ashes, It’s a Leader Reborn
The company in question is Intel Corp. (NASDAQ: INTC), the chip giant that once seemed invincible.
As we detailed in our “Leaders to Laggards” series a while back, Intel was once half of the so-called “Wintel” duopoly – partnering with Microsoft Corp. (NASDAQ: MSFT) to dominate the personal computer market.
At the Wintel peak, Microsoft’s Windows operating system ran more than 95% of the world’s PCs, and its word-processing and spreadsheet programs accounted for an estimated 95% of the market for office-applications software.
Intel chips were the brains in more than 90% of the world’s PCs. Its identity was so strong that by stamping “Intel Inside” on the beige PC cases, the company was able to “brand” what might otherwise have been a commodity product.
Throughout the 1990s, Intel was a “must own” stock – the shares rose 10,000% during the decade.
After missing the smartphone boom, the company has refocused.
And its move into AI has made the stock intriguing once again.
Intel has unveiled a computing system with the brainpower of a small animal. It’s built on neuromorphic chips, so-called because the processors are designed to work like an actual brain.
Dubbed Pohoiki Springs, the Intel system is composed of 768 Loihi neuromorphic chips inside a frame the size of five regular computer servers. These processing chips pack 130,000 artificial neurons and 130 million synapses.
When used in Pohoiki Springs, the number of neurons is boosted to an astounding 100 million (likening it to that of a small mammal).
A Look to the Future
Gartner predicts that neuromorphic chips will displace graphics processing units (GPUs) by 2025. This is a big deal because GPUs are one of the main computer chips used for AI – especially neural networks.
Unlike traditional computers, which have to process information in one area and then send it along to another area for storage, Loihi is able to perform both functions in the same spot.
By slashing the distance that data must travel, you’re essentially speeding up the chips – saving time – even as you reduce the energy draw.
Intel says that the Loihi chips are “1,000 times faster and 10,000 times more efficient at certain tasks than conventional processors.”
And saving energy is a major advantage of neuromorphic computing since energy consumption typically hinders largescale AI deployments.
Recently, Intel researchers programmed an AI system to recognize the odors of the types of hazardous chemical often used to mask the presence of drugs or bombs.
It could detect scents like ammonia, acetone, and methane – even when other smells were used to mask them. Loihi needed only a single sample to learn each odor.
Compare that to the 3,000 samples required to train a state-of-the-art “deep learning” system to achieve the same level of classification accuracy.
As I said, Loihi has true game-changer potential.
In a market like this one, innovation is crucial.
But so is safety.
Intel offers both.
Strength in the Face of Weakness
Like other tech firms – indeed, like other big companies in general – the COVID-19 shutdown will crimp Intel’s near-term results.
But I truly believe it could navigate this stretch and emerge in better shape than other firms.
Let’s start with its most recent quarterly reports – where Intel “beat the Street” on both sales and earnings.
For the fourth quarter that ended Dec. 31, earnings per share rose 19% to $1.52. Total profits came in at $6.9 billion. Sales climbed 8% to a record $20.2 billion.
For the first quarter, reported in late April, Intel said it had net income of $5.7 billion – a year-over-year jump of 43%. Earnings per share came in at $1.45 a share – well ahead of the $1.28 Wall Streeters had forecast. Revenue zoomed 23% to $19.8 billion – again well above the analyst forecast of $18.7 billion.
Intel’s shares took a hit when the company – following the practice of many other firms – said it would not offer full-year guidance, citing the uncertainty of the coronavirus pandemic.
At a recent price of nearly $60, the shares are down about 14% from their 52-week highs.
That tells me that analysts are continuing to underweight the potential impact of Pohoiki Springs – which is how it’s been since Intel unveiled it in mid-March.
What’s more, in the latest move to expand its automotive division, Intel recently acquired Moovit, an Israel-based urban mobility platform, in a whopping $900 million deal.
Moovit is a startup firm that provides traffic data to third-party firms, including about 7,500 transit authorities as well as to Uber Technologies Inc. (NYSE: UBER) and Intel itself. Additionally, its app has around 800 million users around the globe.
Intel also plans to use the firm’s technology to further expand the services it offers through Mobileye, which has already been working with Moovit prior to the acquisition. Mobileye is the autonomous car company that Intel acquired back in 2017 for $15.3 billion and is the foundation of Intel’s efforts in the automotive sector.
This deal is further proof that Intel has one main goal in mind and that is to keep growing.
The fact is that Intel’s cheap valuation, muscular balance sheet, decent 2.2% dividend yield, and moves to further expand offer an intriguing scenario: a very nice long-term upside and a likely limited near-term downside.
Add all these things up, and you’ll see why I rate Intel as a powerful firm with some innovative tricks up its sleeve – and limited downside – meaning it’s a stock you should at least have on your personal “watch list.”
— Michael A. Robinson
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Source: Money Morning