Intel stock up as analysts praise new desktop chip

Sumit Dhanda Dhanda's estimates suggested that Intel's new low-end Atom chip will add $500 million to sales in 2008. He also said Intel's move into the lower end of the desktop and notebook chip market will likely raise average gross margins.

He accepted his profit-margin estimate went against popular perception, but his analysis suggests that the cost structure afforded by a smaller chip will bring profit margins on par with Intel's core processor chips.

He estimated that the move into the low-end personal computer market will add 4 cents to 5 cents per share in 2008.

The Atom could be the biggest growth driver for Intel since its highly successful Centrino chip launch five years ago, Dhanda said, noting that it was a more significant development than Intel's high-profile entry into the mobile Internet market.

Lehman Brothers analyst Tim Luke said he was encouraged by Intel's order trends and new product execution.

Solid strength in Intel's notebook and server segments could produce better results than he had expected for the second quarter and fiscal year, he added.

Intel shares rose 65 cents, or 2.7 percent, to $24.49 in afternoon trading. They have traded in the past year between $18.05 and $27.99.