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AppliedMicro +10.9%, Cavium +1.7%; Canaccord bullish on ARM servers

  • Canaccord's Matthew Ramsay has launched coverage of AppliedMicro (AMCC) with a Buy and $16 PT, and on fellow ARM (ARMH) server CPU play Cavium (CAVM) with a Buy and $62 PT.
  • Ramsay sees ARM designs grabbing 20% of a 2018 server CPU market he expects will be worth $19B (up from a current $12B).
  • Though software support and the dominance of Intel's x86 CPUs act as challenges, there's plenty of optimism about the ability of ARM designs to address demand for low-power CPUs for hyperscale deployments, as well as to cater to application-specific niches better than general-purpose Intel CPUs.
  • Cavium is going after the latter opportunity with its Project Thunder CPUs - Ramsay expects strong sales growth starting in 2H15. In the near-term, he expects a 50% 2013 increase in Cavium's core network processor design wins to drive 20%+ revenue growth.
  • As for AppliedMicro, he sees the early lead for the company's X-Gene ARM CPUs - parts have been sampling for nearly a year, and plenty of software testing has been done - allowing AppliedMicro to hit its target of doubling quarterly sales by the end of 2016.
  • Cavium recently unveiled ThunderX, a next-gen solution supporting up to 48 home-grown ARM cores (requires a costly architectural license) - chips meant specifically for networking, storage, and security hardware will be offered. AppliedMicro is prepping next-gen X-Gene CPUs supporting up to 16 cores.
Comments (2)
  • Paulo Santos
    , contributor
    Comments (20470) | Send Message
     
    If there really was any optimism for ARM servers, then INTC wouldn't be going straight up.
    10 Jun, 12:06 PM Reply Like
  • Robert McDonald
    , contributor
    Comments (1263) | Send Message
     
    Intel is like Microsoft. Brokers sell it to their clients and investors buy it because it is a well known big cap and pays dividends. What investors need to understand is the fact that the mobile web, associated software and devices, as well as ARM RISC processors, are a huge disruptive force in the world of computing. The world is literally going mobile and stand alone machines are providing a smaller and smaller fraction of the computing horsepower that is being consumed by the end customer. Both companies are struggling to meet that threat but so far have not found a way to head off the onslaught. Most investors do not understand the business jeopardizes and are relying on past performance to predict future gains that may never be realized.

     

    Yes there is a temporary reprieve right now as Windows XP machines are upgraded but no one should be fooled by that. That conversion is being forced by the fact that Microsoft recently dropped on-going support for this operating system. When that burst runs dry, look out below.
    10 Jun, 12:33 PM Reply Like
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