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Mellanox's (MLNX) InfiniBand Selected by Chinese Institute

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Mellanox Technologies, Ltd. (MLNX - Free Report) recently won a contract from a Chinese weather research institute for an undisclosed amount. Per the deal, the company has been selected for its EDR 100 gigabit InfiniBand solutions which will substitute the OmniPath network in the current data center infrastructure. The InfiniBand solutions will aid the research institute to expand its applications performance and maximize data center return on investment.

Institute’s selection of Mellanox’s InfiniBand solution will strengthen its competitive position against Intel’s (INTC - Free Report) Omni-Path solution. According to the company, InfiniBand is the most used HPC interconnect of late, exhibiting 1.9 times higher system efficiency for weather and climate predicting applications projects compared with Omni-Path.

InfiniBand is highly scalable and its off-loading capabilities that reduce load on CPUs are attracting artificial intelligence (AI), machine learning and deep learning providers.

The selection of InfiniBand solutions boosts the systems processing performance and scalability. The enhanced features allow the system to tackle computational problems related to the emerging field of AI and its subsets machine learning and Big Data analytics.

Price Performance

Shares of Mellanox have gained 45.4% in the last year, outperforming the industry’s rally of 3.9%.

InfiniBand Adoption Remains Strong

Institute’schoice of using InfiniBand reflects rapid adoption of the interconnect solution. According to Mellanox, which quoted the TOP500 list, InfiniBand connected 77% of the new HPC systems in the June-November 2017 time frame. It connects 60% of the HPC TOP500 systems.

Mellanox stated that InfiniBand connected six times more new HPC system on the TOP500 than Intel’s OmniPath. Also, its adoption is commendable as the largest supercomputer in China, Japan, Canada and upcoming 2018 largest supercomputer in the United States, all utilize InfiniBand.

In the last reported-quarter (fourth-quarter fiscal 2017), InfiniBand revenues were $102 million, up 1.9% sequentially. Mellanox expects InfiniBand product line to further grow sequentially, driven by multiple large deals in the current and upcoming quarter. The company expects LinkX revenues for both InfiniBand and Ethernet grow more than 50% in 2018 and beyond.

Notably, revenues from EDR 100 Gigabit per second InfiniBand products (49% of InfiniBand revenues) were up 2.8% year over year in fourth-quarter 2017.

Furthermore, the company has won contracts from the likes of NetApp, the University of Toronto and NASA Ames Research Center, which reflects strong demand for its solutions.

The University of Toronto also selected the Mellanox InfiniBand solutions to accelerate its new leading supercomputer in Canada. Earlier, the NASA Ames Research Center selected the company’s EDR InfiniBand solutions along with HPE SGI 8600 liquid cooled platform to expand its “Electra” supercomputing cluster.

Additionally, Mellanox’s collaboration with Microsemi Corporation is also expected to solidify the company’s footprint in the high performance computing market, going forward.

Zacks Rank & Other Key Picks

Mellanoxsports a Zacks Rank #1 (Strong Buy).

Amazon.com, Inc. (AMZN - Free Report) and Western Digital Corporation (WDC - Free Report) are other top-ranked stocks in the technology sector. Both the companies flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com and Western Digital have a long-term earnings growth rate of 26.8% and 19%, respectively.

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