3 Reasons Intel Could Surge in 2014

Many investors believe that Intel's best days are behind it, as the tech giant's chips have a much lower share in the explosive smartphone and tablet markets than Intel enjoys in desktop and laptop PCs. Even worse, Intel's core computing markets have been declining, with tablets and other mobile devices expected to soon surpass traditional forms of personal computers. While I certainly understand these fears, here are three things that could potentially drive Intel's stock price higher in the year ahead.

A bold move in the tablet arena
Intel's management has acknowledged that they missed the boat when it comes to the incredible growth of mobile devices, but the war is far from over. Intel has begun to focus on reduced power consumption -- a necessity for mobile chipsets -- and its new Bay Trail chips have earned positive reviews in this area while maintaining impressive performance capabilities. Intel's process technology lead should allow it to strengthen the performance and efficiency capabilities of its chips, which could help Intel earn some design wins among smartphone and tablet manufacturers in the coming years. To quicken this process, Intel's newly appointed CEO, Brian Krzanich, is making an aggressive move by basically giving away 40 million processor chips to tablet manufacturers next year. If this audacious maneuver allows Intel to gain a beachhead in the massive and fast-growing tablet market, the company's market share gains -- and eventually, revenue growth -- could accelerate at a much faster pace than many investors currently expect.

Continued dominance in PC processor technology
Intel bears will point out the threat of vertical integration among Intel's major partners such as Apple , whose new A7 chip has met with rave reviews. While it's true that Apple's A7 chip is quite impressive, it's designed for mobile devices that typically prioritize power efficiency over raw computing power. For desktop workstations and many high-end laptops geared for business users and creative professionals, processing speed and power are of paramount importance -- and that is where Intel excels. Furthermore, Intel's new chips in the ultra-mobile laptop computing segment have been credited with the huge leap in battery life for products such as Apple's recently updated MacBook Air. That's why I believe it's unlikely that Apple will move toward using its in-house designed chips across its entire product line. Instead, I think a partnership between these two tech titans is more likely, with Intel eventually building Apple's in-house designed chips for iOS devices and continuing to supply Apple with Intel-designed processors for its Macs.

The surging growth of the cloud
An often overlooked component of Intel's business is its highly profitable data center operations. Intel is benefiting from the rapid growth in cloud computing, for as companies build up their cloud infrastructure, they will require more high-performing servers powered by Intel chips. That's because Intel dominates the data center market, and it's an area where Intel should continue to excel in the years ahead.

The Foolish bottom line
If Intel can maintain its dominant position in PCs and servers, and begin to accumulate design wins among major smartphone and tablet manufacturers, Intel could make its shareholders very happy in 2014.

Next steps
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