The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Intel Stock Prediction

Summary:

Intel still has a robust market for its existing inventories of Atom-based processors.

This is good for Intel’s bottomline. It doesn’t need to write down its inventory of Atom processors.

Cherry Mobile, the Philippines’ top vendor of smartphones, is selling a dual-boot Windows 10/Android 5.1 convertible laptop for less than $150.

Intel is also pushing for Universal Stylus Initiative.

Chinese vendors are also creating dual-boot, Intel Atom-based Windows/Android tablets, PC Stick computers, and mini-computers.

The I Know First Algorithm maintains a bullish forecast on INTC

The future of Intel (INTC) is still rosy in spite of its recent decision to no longer develop LTE-integrated SoFia and Broxton-based Atom processors. Long-term investors should realize that Intel is now a licensed foundry service provider for 10-nanometer ARM-based processors and semiconductor products. Intel is now a legitimate threat to semiconductor foundry players like TSMC (TSM) and GlobalFoundries.

The other important positive development for Intel is that investors should not worry about the company’s existing inventories of mobile processors. There are customers for Intel’s Cherry Trail Atom x3 and Atom x5 inventories. First of all, talking about this topic is important because the bottomline of Intel is better when it doesn’t have to write-down unsold inventories of processors.

(Source: Intel)

The revenue from its license to build ARM-based processor is still one or two-years in to the future. Intel’s 2016 and 2017 performance will be more likely influenced on how fast it can sell its existing pile of Cherry Trail and BayTrail processors. Getting rid of its current product line is more important for Intel’s stock performance for the next 12 months.

I believe Intel is not having a hard time finding buyers for its Atom processors. Smartphone vendors who are under extreme pressure from low-to-zero margins on Android phones are now expanding to building dual-boot Windows 10/Android 2-in-1 tablets.

Dual-Boot Windows+Android Tablets And Laptops Need Intel Atom Processors

Intel’s zero announcement over the fate of its inventories of Atom processors can only mean one thing. Intel is having a great time supplying its Cherry Trail processors to Chinese manufacturers eager to provide cheaper alternatives to Microsoft’s (MSFT) $499-$1,999 Surface tablet.

Chinese firms like Teclast, Chuwi, and Cube are now aggressively selling dual-boot tablets powered by Intel’s Atom x5-z8300 processor. The truth is these firms have no choice but to use Intel’s Atom products. Only x86-based processors are capable of dual-boot Windows 10 and Android OS. ARM-based processors can never run the desktop version of Windows operating system.

It is my firm belief that the dual-boot, 2-in-1 tablet/laptop form factor is the future of laptop PCs. Students, employees, and home users will eventually appreciate the flexibility of a single laptop capable of Windows-based productivity and Android gaming/entertainment.

Intel will, therefore, have an easy time unloading its current supply of 14-nanometer Cherry Trail processors. It will also likely develop 10-nanometer successors to the Cherry Trail. Intel currently enjoys a monopoly on processors intended for dual-boot Windows/Android tablets. It is therefore only prudent for Intel to keep developing better Atom processors for this niche market.

Ever since the debut of Microsoft’s Surface Pro 3, 2-in-1 tablets have posted consistent surge in sales. It was only logical for Shenzhen-based firms like Teclast and Chuwi to offer cheaper Intel-powered versions of the Surface Pro. The Chinese firms want people to enjoy the convenience of buying just one tablet/laptop to do their Windows tasks and Android gaming.

Cherry Mobile, the no.1 vendor of smartphones here in the Philippines, is also riding this dual-boot Windows/Android laptop/tablet frenzy. The P5,999 ($129) Cherry Mobile Cubix Morph has an Intel Atom x5-z8300 quad-core processor and 2GB of RAM. It is being endorsed by the Philippines’ hottest male movie star, Piolo Pascual.

(Source: Cherry Mobile)

The market demand for dual-boot Windows/Android tablet is also only going to get stronger. Intel is pushing for the world to its Universal Stylus Initiative. This move will usher in device-agnostic stylus pens to work on any brand of tablets, smartphones, and touch-enabled computers.

It will be convenient to use a $99 Pencil from Apple (AAPL) on a $129 Cubix Morth Windows/Android tablet laptop. The ARM-based iPad Pro cannot run the full versions of Adobe’s (ADBE) Creative Cloud programs like Photoshop and Illustrator CC.

My point is that the Universal Stylus Initiative makes affordable dual-boot Intel Atom-powered tablets like the Cubix Morph very useful for designers and office professionals.

Mini-Computers Are Also Going Intel and Dual-Boot

Atom processors also have ready buyers from manufacturers who build PC sticks and mini-computers who can dual-boot Windows and Android. Budget-conscious corporations, government agencies, and corporations are obvious markets for products like the MoreFine M1 dual-boot Windows/Android PC Stick.

The Atom-powered M1 offers a cheap way for companies to upgrade their Windows XP/Windows 7 desktop tower computers into space-saving, wireless Windows 10 office computers. When office hours are done, workers could boot into Android OS to play some games for one hour to relax before they head home.

(Source: Amazon)

A dual-boot Atom-based PC Stick is also a portable testing tool for developers to test their Android apps they create on Windows IDE like Visual Studio .NET.

My Takeaway

Intel has a unique advantage over ARM-based processor vendors. Its energy-efficient Atom-based processor is the only product that is monopolizing the growing market for flexible, dual-boot computers. Current INTC investors should therefore add more to their holdings.

Intel has a clear long-term tailwind from the rising popularity of dual-boot Windows/Android tablets, laptops, and mini-computers. Alphabet (GOOG) and Microsoft (MSFT) has not made any recent objection to this phenomenon. Cherry Mobile is both the official partner of Google and Microsoft here in the Philippines. Alphabet and Microsoft made no complaints about Cherry Mobile aggressively advertising (online and through TV) its dual-boot Cubix Morph with a celebrity endorser.

We can safely assume that Intel’s Atom processor will continue to get processor supply orders from manufacturers/vendors of dual-boot computers. I guestimate that Intel could sell 10-30 million Atom processors per year to these makers of dual-boot computers. Any revenue stream that reduces Intel’s reliance on traditional PC sales is good for the company.

Yes, there is little profit to be made from selling $21-$37 Atom mobile processors. However, the Intel Inside logo behind dual-boot tablets and PC Sticks should be considered as free advertising banners for Intel. Going forward, there will still be Intel Inside-tagged mobile devices even without Intel actively selling smartphone processors.

My Buy rating for Intel is also supported by I Know First’s still-positive algorithmic forecasts for INTC. The 3-month and 1-Year trend signals are both positive for INTC. The stock is more likely to go up in price rather than drop within the next few months.

The long-term technical indicators of INTC are also screaming a Strong Buy endorsement. Buy INTC now while it still trades below $36.