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Can Qualcomm Take Intel's Share in the Data Center Market?
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The market leader in mobile chipsets, Qualcomm Inc. (QCOM - Free Report) , entered the server market recently. This area is presently dominated by Intel Corp. (INTC - Free Report) . However, with Qualcomm’s entry in this intensely competitive yet lucrative data center chipset market with its latest 10nm Centriq ARM-based processors is a direct challenge to Intel.
An Opportunity
Intel controls 95% of the server market, primarily on the back of its immensely profitable Xeon and energy efficient Avoton x86 processors. As cloud computing continues to grow bigger, more firms will need to expand their server infrastructure to cater to increased demand. However, with several firms venturing into the data center business, the industry stands the risk of narrow margins. Qualcomm seeks to capitalize on this untapped market opportunity with its energy efficient ARM-based chipset.
In general, ARM-based processors are more energy efficient and lower priced than Intel-based processors. This is likely to aid data center firms with limited budgets to operate at low costs. Moreover, Qualcomm’s entry into this field will challenge Intel’s monopoly over the market, allowing fair price environment. This is likely to help the data center industry in general.
The Bottom Line
Qualcomm’s foray into the server market can be deemed a healthy move for the industry. However, one must note that firms like Advanced Micro Devices Inc. (AMD - Free Report) and Cavium Inc. have also tried to challenge Intel in the past with ARM-based processors, but have failed miserably. Moreover, for the already existing cloud operators, switching to another system could be complicated. Further, International Business Machines Corporation (IBM - Free Report) is anticipated to enter into the data center market with its new Power9 technology. Nevertheless, Qualcomm is an experienced player in the ARM business and has sufficient resources for R&D. The company is confident of the benefits of its ARM architecture and is hopeful of catering to the needs of the ever-growing data center industry in the near future.
Price Performance of Qualcomm
Year to date, Qualcomm has witnessed growth of 37.08%. On the other hand, Intel was able to register only 3.80% growth. However, Qualcomm remains challenged in its primary mobile chipset from low cost mobile chipset manufacturers. This is the primary reason why Qualcomm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Can Qualcomm Take Intel's Share in the Data Center Market?
The market leader in mobile chipsets, Qualcomm Inc. (QCOM - Free Report) , entered the server market recently. This area is presently dominated by Intel Corp. (INTC - Free Report) . However, with Qualcomm’s entry in this intensely competitive yet lucrative data center chipset market with its latest 10nm Centriq ARM-based processors is a direct challenge to Intel.
An Opportunity
Intel controls 95% of the server market, primarily on the back of its immensely profitable Xeon and energy efficient Avoton x86 processors. As cloud computing continues to grow bigger, more firms will need to expand their server infrastructure to cater to increased demand. However, with several firms venturing into the data center business, the industry stands the risk of narrow margins. Qualcomm seeks to capitalize on this untapped market opportunity with its energy efficient ARM-based chipset.
In general, ARM-based processors are more energy efficient and lower priced than Intel-based processors. This is likely to aid data center firms with limited budgets to operate at low costs. Moreover, Qualcomm’s entry into this field will challenge Intel’s monopoly over the market, allowing fair price environment. This is likely to help the data center industry in general.
The Bottom Line
Qualcomm’s foray into the server market can be deemed a healthy move for the industry. However, one must note that firms like Advanced Micro Devices Inc. (AMD - Free Report) and Cavium Inc. have also tried to challenge Intel in the past with ARM-based processors, but have failed miserably. Moreover, for the already existing cloud operators, switching to another system could be complicated. Further, International Business Machines Corporation (IBM - Free Report) is anticipated to enter into the data center market with its new Power9 technology. Nevertheless, Qualcomm is an experienced player in the ARM business and has sufficient resources for R&D. The company is confident of the benefits of its ARM architecture and is hopeful of catering to the needs of the ever-growing data center industry in the near future.
Price Performance of Qualcomm
Year to date, Qualcomm has witnessed growth of 37.08%. On the other hand, Intel was able to register only 3.80% growth. However, Qualcomm remains challenged in its primary mobile chipset from low cost mobile chipset manufacturers. This is the primary reason why Qualcomm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>