Tuesday, February 26, 2019

"Top-Rated Chipmaker Xilinx Gets Big Price-Target Hike On 5G Prospects" (XLNX; NVDA)

Although the stock is more extended than NVIDIA was at a similar stage of development, XLNX is clearly the new "It Girl" of the chip world. (sorry NVDA):

This is part of the trend away form generalist chips such as NVIDIA's toward more targeted approaches, in this case field programmable gate arrays which as the name implies can be fine-tuned by the end user. We saw a similar specialization begin a couple years ago in the cryptocurrency mining rigs when they moved to less versatile ASIC's versus AMD and NVIDIA graphics processors.
From Investor's Business Daily:
A Wall Street brokerage on Tuesday raised its price target on Xilinx (XLNX), saying the chipmaker is poised to benefit in a big way from the transition to 5G wireless. However, the report didn't help Xilinx stock, which fell on Tuesday.

Despite all the hype about fifth-generation wireless technology, consumer demand is an open question, KeyBanc Capital Markets said in a note to clients. So, the best way for investors to play the 5G transition is to bet on companies building the network infrastructure.

"At this point, we believe the most compelling way to benefit from the 5G upgrade cycle is on the infrastructure side, for which we recommend investors buy XLNX," KeyBanc said. It said Xilinx has "outsized positioning in 5G."

KeyBanc analyst John Vinh reiterated his overweight rating on Xilinx stock and raised his price target to 140 from 110.

Xilinx Stock Retreats After Hitting Record High
Xilinx stock dropped 1% to 122.78 on the stock market today. On Monday, Xilinx stock notched a record high of 126.29. Xilinx currently ranks No. 35 on the IBD 50 list of top-performing growth stocks.

At MWC Barcelona, formerly Mobile World Congress, smartphone vendors showed off their first 5G handsets. Samsung, LG, Huawei and others unveiled 5G smartphones at the trade show this week....MORE
IBD has been cheerleading the stock for a while now and we have a few posts as well:
Feb 6
Watch Out NVIDIA: "Amazon, Huawei efforts show move to AI-centric chips continues"
This move toward specialized chips is something the cognoscenti have been talking about for a few years, see after the jump if interested....
Jan 29 
A Look At the Components Of the PHLX Semiconductor Index (SOX)
Jan. 24
Watch Out Nvidia, Xilinx Is Performing (reports, beats, pops) XLNX; NVDA
Xilinx with their field-programmable gate array approach versus Nvidia's more generalist chips is an example of the type of competition experts were predicting NVDA would be facing, some over two years ago, links after the jump...
Sept 2018 
Hot Chips 2018 Symposium on High Performance Chips
Sept 2018 
Chips: "A Rogues Gallery of Post-Moore’s Law Options"
Aug 18
Ahead of NVIDIA Earnings: The Last of the "Easy" Comparisons (NVDA)
Beating that Q3 2017 EPS, 90 cents, by double i.e. $1.80 or more, is doable but AI and data centers will have to pick up the slack from the Q1 and Q2 cryptocurrency bump that started declining with Bitmain and other miners use of ASICs rather than GPU's.

Going forward the trend toward specialist proprietary chips, see Tesla's development of their own chips etc, etc will leave NVIDIA with a couple holes in the potential addressable markets they will want to fill.

Additionally, the smaller pups, some still in stealth, are nipping at the big dog's heels, making it more expensive for NVIDIA to maintain their edge in architecture....
Aug 2018
Artificial Intelligence Chips: Past, Present and Future
May 2018
Chipmakers Battle To Power Artificial Intelligence In Cloud Data Centers" (AMD; NVDA; XLNX; INTC)
May 2018 
"Xilinx Analyst Day Plays Heavy on AI" (XLNX)
May 2018
"Intel vs. Nvidia: Future of AI Chips Still Evolving" (INTC; NVDA)
Dec. 2017
“'The Ultimate Trading Machine' from Penguin Computing sets Record for Low Latency"