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Broadcom (AVGO) Strengthens Ties With HPE in Storage Server

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Broadcom Inc. (AVGO - Free Report) has expanded its partnership with Hewlett Packard Enterprise Company (HPE - Free Report) in server storage. The companies will join forces to demonstrate U.3 reference platform, SFF-TA-1001 at HPE Discover. The U.3 universal drive cage will feature Toshiba U.3 enabled SAS, SATA and NVMe drives.

The move marks Broadcom’s intents to further strengthen its ties with HPE by including Broadcom 24-port RAID controller to the HPE ProLiant Gen10 server family. HPE’s Smart Array P824i-p MR SAS controller furnishes an ideal solution for storage servers. The controller provides flexible, expander-less storage suitable for high drive count as in HPE ProLiant DL380 Gen10.

U.3 technology enables SSDs (SATA, SAS and NVMe) and HDDs (SATA and SAS) to function in a single bay. It renders the practice of wiring multiple protocols redundant, consequently simplifying the processes.

Broadcom remains committed in providing the customers with robust application uptime and data protection. The customers are likely to gain significantly from the extended Broadcom enabled HPE server storage solutions. Lower costs, simplifying complexity, enhanced drive as well as storage flexibility and improved performance are the key benefits.

We believe the company’s strengthening collaboration with HPE makes it well poised to expand data center server storage capabilities. We believe an expanding RAID portfolio bodes well for Broadcom in the long run.

Additionally, per a Technavio report, global RAID controller card market revenues are projected to reach $2.9 billion by 2021. This report reinforces our belief regarding the potential of the company’s RAID solutions.

Shares of Broadcom have returned 8.6% in the past three months, outperforming the industry’s rally of 7.6%.

Bottom Line

Broadcom is benefiting from robust demand of its wireless solutions and expanding product portfolio. It makes the company well-positioned to address the needs of rapidly growing technologies like IoT and 5G.

However, investors are cautious regarding the customer concentration woes and intensifying competition in most of the markets in which the company operates.

Zacks Rank & Key Picks

Broadcom currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the broader technology sector are Western Digital Corporation (WDC - Free Report) and Micron Technology, Inc. (MU - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Western Digital and Micron have a long-term expected EPS growth rate of 19% and 8.2%, respectively.

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