Intel inside ... your portfolio

Intel’s (Nasdaq: INTC) dominant position in the PC chip business might have you thinking that it’s in trouble, with PC sales weakening as consumers turn more to smartphones and tablets. But Intel is changing with the times, and with its data centers, has become a significant player in the fast-growing cloud computing arena.

In its last quarter, overall revenue was flat year over year, at $12.8 billion, but data center revenue grew by double digits. More specifically, tablet platform unit volume surged 45 percent year over year in its last quarter, while desktop platform unit volume sank by 16 percent. Meanwhile, data center unit volume grew by 15 percent — with prices rising by 5 percent, too.

Intel’s most recent big news, though, is that it’s buying chip maker Altera for about $16.7 billion, its largest purchase ever. Altera specializes in field-programmable gate arrays, or FPGAs, which can help Intel’s server and data center businesses by speeding up servers and can give it inroads into networking and wireless applications. It plans to integrate FPGAs onto its processor chips, for example.

Intel’s future is not certain, but with annual free cash flow topping $11 billion, a price-to-earnings , or P/E), ratio in the low teens and a dividend that recently yielded 3 percent, its stock is looking rather appealing. (The Motley Fool has recommended Intel.)