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Intel's (INTC) Q2 Earnings to Ride on DCG, IoT, NAND & Cloud
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Intel (INTC - Free Report) is scheduled to report second-quarter 2018 results on Jul 26.
The company has been on the lookout for a new CEO following Brian Krzanich’s resignation last month over violation of the company’s anti-fraternization policy. Things took an interesting turn with Diane Bryant, an ex-Intel employee, resigning from the position of COO at Alphabet’s (GOOGL - Free Report) Google Cloud after joining the search giant less than a year ago.
Speculations are rife that Bryant is likely to return to Intel, as the permanent CEO. Realizing the gravity of the matter, the chipmaker cleverly timed the resignation announcement with a revision in the second quarter of fiscal 2018 guidance.
Intel Corporation Price, Consensus and EPS Surprise
Click here to know how the company’s overall Q2 performance is likely to be.
DCG: Trend Favorable
We expect robust performance from the data centric part to drive results. Data Center Group (“DCG”), Internet-of-Things Group, Non-Volatile Memory Solutions and Programmable Solutions Group along with MobilEye form the crux of Intel’s data-centric business model, which contributed almost 49% of total revenues.
Management stated that data-centric businesses were up 25% collectively, with each business individually growing in double digits.
Data Center Group (32.6% of revenues) — Revenues increased 23.7% year over year to $5.23 billion. Growth was broad-based with strong demand for high-performance products (including Xeon Scalable) drove ASPs.
Per Intel, the cloud service provider revenues advanced 45%. Cloud business surpassed $2 billion in revenues in the reported quarter. Enterprise & Government was up 3%. Commercial service provider revenues surged 33%. Cloud and Commercial service provider were greater than 60% of DCG's revenues.
Intel’s strategy of expanding TAM beyond CPU to adjacent product lines like silicon photonics, fabric, network ASICs, and 3D XPoint memory is bearing fruit.
IoT, NAND & Cloud to Aid Intel’s Growth
Intel along with other tech giants recently revealed two new security bugs, namely Speculative Store Buffer Bypass or Variant 4 and Rogue System Registry Read. Consequently, this will mitigate the possibility of compromising cyber security.
Intel and Micron (MU - Free Report) also took forward their long-standing relationship by updating the terms of their 3D XPoint joint development partnership formed in July 2015. The alliance resulted in the development of non-volatile memory that is must faster and more reliable/endurable than NAND.
According to Research and Markets, the global NAND flash market will witness CAGR of 15.13% during the period 2018-2022 driven by the increasing adoption of smartphones and tablets with features such as gesture control, fingerprint scanners, image scanners, and GPS. 3D NAND is gaining momentum, driven not only by smartphones, tablet PCs and notebooks but also enterprise adoption in data centers due to its reliability and efficiency. Given these factors, we expect Intel to strengthen their market position against peers.
Internet of Things Group (5.2% of revenues) — Revenues jumped 16.5% from the year-ago quarter to $840 million. Growth can be attributed to strength in retail and video applications. Intel recently announced that it will divest Wind River, which will help in improving focus on the core IOTG segment.
The company’s investments in field programmable gate array (FPGA) for acceleration (dramatically increases performances at very low power) and memory to reduce latency and increase speeds are helping it develop custom solutions for big players.
Programmable Solutions Group accounted for 3.1% of total revenues in first-quarter 2018. The segment reported growth of 17.2% from the year-ago quarter to reach $498 million. Strength in data center and embedded products drove top-line growth.
Further, PSG's data center segment soared 150% from the year-ago quarter. Management stated that revenues from advanced FPGA products (28, 20 and 14-nm) grew 40% from the year-ago quarter.
Intel recently stated its plans to acquire eASIC. The impending new development raises the bar, providing the tech giant a significant edge in the space. Customer base continues to expand as PSG wins more customer designs. Notably, Microsoft (MSFT - Free Report) has selected Intel's FPGAs to power new Bing intelligent search features using real-time Artificial Intelligence (“AI”).
With the eASIC buyout, Intel will bolster PSG capabilities significantly. The new offerings will provide it a further edge over Xilinix, going forward.
The Zacks Consensus Estimate for the Programmable Solutions Group is currently pegged at $517 million, 16.2% year over year.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Intel's (INTC) Q2 Earnings to Ride on DCG, IoT, NAND & Cloud
Intel (INTC - Free Report) is scheduled to report second-quarter 2018 results on Jul 26.
The company has been on the lookout for a new CEO following Brian Krzanich’s resignation last month over violation of the company’s anti-fraternization policy. Things took an interesting turn with Diane Bryant, an ex-Intel employee, resigning from the position of COO at Alphabet’s (GOOGL - Free Report) Google Cloud after joining the search giant less than a year ago.
Speculations are rife that Bryant is likely to return to Intel, as the permanent CEO. Realizing the gravity of the matter, the chipmaker cleverly timed the resignation announcement with a revision in the second quarter of fiscal 2018 guidance.
Intel Corporation Price, Consensus and EPS Surprise
Intel Corporation Price, Consensus and EPS Surprise | Intel Corporation Quote
Click here to know how the company’s overall Q2 performance is likely to be.
DCG: Trend Favorable
We expect robust performance from the data centric part to drive results. Data Center Group (“DCG”), Internet-of-Things Group, Non-Volatile Memory Solutions and Programmable Solutions Group along with MobilEye form the crux of Intel’s data-centric business model, which contributed almost 49% of total revenues.
Management stated that data-centric businesses were up 25% collectively, with each business individually growing in double digits.
Data Center Group (32.6% of revenues) — Revenues increased 23.7% year over year to $5.23 billion. Growth was broad-based with strong demand for high-performance products (including Xeon Scalable) drove ASPs.
Per Intel, the cloud service provider revenues advanced 45%. Cloud business surpassed $2 billion in revenues in the reported quarter. Enterprise & Government was up 3%. Commercial service provider revenues surged 33%. Cloud and Commercial service provider were greater than 60% of DCG's revenues.
Intel’s strategy of expanding TAM beyond CPU to adjacent product lines like silicon photonics, fabric, network ASICs, and 3D XPoint memory is bearing fruit.
IoT, NAND & Cloud to Aid Intel’s Growth
Intel along with other tech giants recently revealed two new security bugs, namely Speculative Store Buffer Bypass or Variant 4 and Rogue System Registry Read. Consequently, this will mitigate the possibility of compromising cyber security.
Intel and Micron (MU - Free Report) also took forward their long-standing relationship by updating the terms of their 3D XPoint joint development partnership formed in July 2015. The alliance resulted in the development of non-volatile memory that is must faster and more reliable/endurable than NAND.
According to Research and Markets, the global NAND flash market will witness CAGR of 15.13% during the period 2018-2022 driven by the increasing adoption of smartphones and tablets with features such as gesture control, fingerprint scanners, image scanners, and GPS. 3D NAND is gaining momentum, driven not only by smartphones, tablet PCs and notebooks but also enterprise adoption in data centers due to its reliability and efficiency. Given these factors, we expect Intel to strengthen their market position against peers.
Internet of Things Group (5.2% of revenues) — Revenues jumped 16.5% from the year-ago quarter to $840 million. Growth can be attributed to strength in retail and video applications.
Intel recently announced that it will divest Wind River, which will help in improving focus on the core IOTG segment.
The company’s investments in field programmable gate array (FPGA) for acceleration (dramatically increases performances at very low power) and memory to reduce latency and increase speeds are helping it develop custom solutions for big players.
Programmable Solutions Group accounted for 3.1% of total revenues in first-quarter 2018. The segment reported growth of 17.2% from the year-ago quarter to reach $498 million. Strength in data center and embedded products drove top-line growth.
Further, PSG's data center segment soared 150% from the year-ago quarter. Management stated that revenues from advanced FPGA products (28, 20 and 14-nm) grew 40% from the year-ago quarter.
Intel recently stated its plans to acquire eASIC. The impending new development raises the bar, providing the tech giant a significant edge in the space. Customer base continues to expand as PSG wins more customer designs. Notably, Microsoft (MSFT - Free Report) has selected Intel's FPGAs to power new Bing intelligent search features using real-time Artificial Intelligence (“AI”).
With the eASIC buyout, Intel will bolster PSG capabilities significantly. The new offerings will provide it a further edge over Xilinix, going forward.
The Zacks Consensus Estimate for the Programmable Solutions Group is currently pegged at $517 million, 16.2% year over year.
Currently, Intel sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>