2 Dow Jones Stocks That Could Benefit From the End of Windows XP

Microsoft and Intel could see a sales boost, but Google is looking to take advantage of the change.

Apr 9, 2014 at 11:30AM

Two of the Dow Jones Industrial Average's (DJINDICES:^DJI) tech components, Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC), could get a boost from the end of Windows XP. Microsoft officially ended support for the operating system on Tuesday, and while this was far from a surprise, it could pad both companies' sales in the coming months -- that is, unless a new Google (NASDAQ:GOOG)(NASDAQ:GOOGL) initiative proves successful.


Source: Wikimedia Commons.

A surprising number of PCs still run Windows XP
After 12 years, Microsoft finally pulled the plug on Windows XP. PCs running the operating system still work, but Microsoft is unwilling to offer tech support, nor will it update Windows XP for any security threats that may develop in the future.

A shocking number of devices still run Windows XP -- by some estimates, more than a quarter of traditional PCs. There's no guarantee that they'll all be updated to use a new OS, but without Microsoft's support, owners -- particularly business users -- are heavily incentivized to make the switch.

Could an upgrade cycle boost Microsoft and Intel?
Upgrading PCs that still feature Windows XP to newer versions of Microsoft's Windows operating system would bring in more revenue for the Redmond, Wash.-based tech giant. Or the computers could be replaced outright with new machines, almost certainly boosting Intel and Microsoft sales in the process.

The vast majority of traditional PCs are powered by Intel's chips; if owners of ancient XP machines upgrade to newer models, they'll more than likely buy Intel-powered machines. Last year, an analyst at Piper Jaffray raised his rating on Intel to neutral, citing -- among other things -- the end of Windows XP as a reason to own the chipmaker's shares.

Microsoft has been encouraging Windows XP holdouts to upgrade for some time, so the boost in sales resulting from the end of that operating system could already be factored into the shares of both Dow Jones components. But given the large number of stragglers -- the Dutch government, for example, is paying Microsoft millions for an extra year of special XP treatment -- a positive uptick in sales could benefit Microsoft and Intel's earnings results for several quarters.

Google hopes to exploit the disruption
Of course, there's no guarantee that owners of Windows XP-powered systems will buy new PCs that feature Intel's chips and Microsoft's Windows. Some might be tempted to purchase a device dependent on a different platform, perhaps a Chromebook -- the low-cost laptop powered by Google's Web-dependent Chrome OS.

Google is offering temporary discounts on Chromebooks for business users who are exiting Windows XP. While Chromebooks offer limited functionality, they're incredibly cheap and have seen strong growth. They're also largely impervious to traditional viruses -- a sharp contrast to the Windows XP machines they'd be replacing. For some businesses, Google's offer could prove enticing, ultimately leading them away from the traditional PC platform long controlled by Microsoft and Intel.

Ultimately, it's clear that the end of Windows XP presents a massive opportunity. The question is which companies are best positioned to exploit this development.

Microsoft, Intel, and Google are betting on the next big thing
Let's face it: Every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in explosive lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and Intel. The Motley Fool owns shares of Google (A shares), Google (C shares), Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers