Is the Galaxy Tab Win the Start of Something Big for Intel Stock?

It's been more than 40 years since Intel (NASDAQ: INTC  ) invented the first microprocessor in 1971, and today, the company has grown into a $124 billion tech giant largely by providing powerful central processing units -- the brains of traditional computers, if you will -- to the ever-growing PC industry.

Unfortunately, the market for PCs has stagnated in recent years with the rise of mobile devices like smartphones and tablets, leaving many investors to wonder whether Intel will actually be able to survive the slow death of the PC.

To be sure, Intel stock has underperformed the S&P 500 index by a whopping 30% over the past year on the heels of three consecutive painful quarters, primarily as the company still found itself on the outside looking in as competitors like Qualcomm and ARM Holdings (NASDAQ: ARMH  ) racked up design wins with their own energy-efficient mobile processors:

Intel stock Total Return Price Chart

Intel Stock Total Return Price data by YCharts

In fact, as of last month, Intel's mobile Atom processors had primarily found homes within a variety of Microsoft's Windows 8 tablets, which haven't exactly been flying off the shelves compared with their iOS and Android-powered counterparts.

A Galaxy of opportunity
That's why Intel stock finally began to gain steam three weeks ago after news broke that Samsung has chosen Intel's Atom Z2560 mobile processor (aka "Clover Trail+") to power at least one version of its Galaxy Tab 3 10.1. What's more, when the folks at Intel confirmed the news with their own announcement a few days later, they elaborated to say the tablet would also include either Intel's XMM 6262 3G modem, or its XMM 7160 4G LTE solution.

In short, considering Samsung's earlier versions of the tablet utilized the energy-efficient offerings of ARM, this move represented a significant coup by Intel to snag market share and stifle the progress of its competition. Consider it no coincidence, then, that shares of ARM Holdings have fallen more than 25% over the past month alone following the loss of one of its largest customers -- when we remember Samsung's tablets arguably stand alone as the single largest threats to Apple's waning tablet dominance, Intel couldn't have asked for a better product line as its first significant win in the mobile device space. 

Foolish final thoughts
With the new Galaxy Tab line-up set to go on sale by the end of this month, the real test lies in how consumers will react to their first Intel-powered Samsung device. If all goes well, then, it's a safe bet that this is just the tip of the iceberg for Intel to take part in the explosive growth offered by the fast-growing mobile computing market.

In the end, with Intel stock currently trading at just 12.5 times last year's earnings, it could prove a bargain that's just too good to pass up.

More expert advice from The Motley Fool
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand when investing in Intel stock. Click here now to learn more.


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