From Tiernan Ray at Barron's Tech Trader Daily, May 23:
I spent Tuesday afternoon in a midtown Manhattan ballroom, listening to Victor Peng, who took over this year as chief executive of Xilinx (XLNX), lay out a new vision of the company, one focused squarely on how the company’s chips can propel artificial intelligence.
There was nothing ugly in the talk, only some good and some bad points, as far as the Street is concerned. The reaction, however, has been a decline in the shares today of $2.91, or 4%, at $68.76.
First, the bad: Analysts are not entirely comfortable with the company’s plan to boost spending this year by 10%, slightly faster than projected rise in revenue of 8% to 10%, for the fiscal year that began this quarter.
Morgan Stanley’s Joseph Moore, reiterating this morning an Outperform rating and a $78 price target, defends the company’s spending, writing that unlike in the past, spending is "more directly tied to enthusiasm about future prospects” such as AI....MUCH MORE
The good news, by most accounts, was the company’s expectation that its addressable market for chips in the data center will rise to $4.6 billion by 2023, a compound annual growth rate of 67% from just $600 million in 2019.
That data center forecast is the foundation for Peng’s projection that from 2019 to 2023, revenue growth should accelerate to greater than 10%.
Peng outlined multiple routes to achieving its share of that market, which it thinks could amount to $1 billion in revenue come 2023, up from relatively little data center revenue today. One route is selling plug-in circuit boards with its chips, rather than just the chips themselves, turning Xilinx into a “platform” company....