Xilinx, Inc. (XLNX - Free Report) recently unveiled Alveo, a suit of accelerator cards, aimed at increasing the performance and productivity of industry-standard servers across cloud and on-premise data centers.
The Alveo U200 and Alveo U250 will enable customers to reconfigure hardware and optimize their productivity according to changing workloads, standards and algorithms, sans any extra replacement costs.
A brief look into the technicalities shows the advantages of Alveo over a wide range of applications. For instance, one of the characteristics of Alveo U250 is that it boosts real-time inference throughput 20 times compared with sophisticated CPUs.
The Alveo chips are powered by the Xilinx UltraScale+ FPGA (field-programmable gate arrays). We are optimistic about the demand of Xilinx’s Ultrascale+ FPGAs by data-center operators for providing FPGA-as-a-Service. Amazon was the first to use Xilinx chips and started offering FPGA-as-a-Service in May 2017. The list also includes Alibaba, which is in the process of deploying two generations of FPGA-as-a-Service by using Xilinx’s Ultrascale+ FPGA chips.
Notably, Xilinx’s new reporting segment, Data Center and Test, Measurement & Emulation grew 11% from the year-ago quarter. Key design wins from hyperscalers globally for accelerating applications beyond FPGA as a Service drove results.
Xilinx Continues to Top Intel’s Share in FPGA Market
The company already has a stronghold in the FPGA market, with a market share of 58% compared with its biggest competitor Intel (INTC - Free Report) , which held a share of 42% as of April 2018. According to Xilinx, it enjoys an 18-month lead over Intel in the FPGA market, which, per MarketsandMarkets, is projected to witness a CAGR of 8.5% in the 2017-2023 period.
We expect that the surge in demand for FPGAs will be backed by its unique ability to be reprogrammed to the desired application or functionality requirements after manufacturing. Therefore, we believe that Xilinx is well placed to grab the opportunity arising from an increase in adoption of AI technologies, 5G connectivity, autonomous vehicles and IoTs.
The company believes that the launch of Alveo accelerator cards will further boost its transformation into a platform company, which has been helping it gain market share. Its expanding product portfolio, which includes the Zynq RFSoC platform launched last year, is assisting it to counter intense competition from the likes of Intel.
In a similar effort, Xilinx has simultaneously launched Versal, the industry's first adaptive compute acceleration platform aimed at delivering scalability and AI inference capabilities for applications across different markets, which is slated to hit the market next year.
Efforts Aid in Countering Competition
The launch of the Versal platform is expected to further strengthen Xilinx’s competitive position against Intel, and also help it counter competition from NVIDIA (NVDA - Free Report) . Management says that the Versal chips will offer up to eight times the inference benchmark performance against currently available NVIDIA GPUs. Moreover, the chips are expected to deliver up to 72 times faster inference workload performance compared to Intel’s Xeon processors.
Earlier this year, Xilinx launched the Everest chips, based on the 7-nanometer (nm) architecture, while Intel is currently still advancing from a 14nm to a 10nm platform.
Robust steps to gain more market share in the industries in which it operates, is boosting Xilinx’s growth. Shares of the company have outperformed the S&P 500’s rally of 9.9%, with an average return of 19%.
Zacks Rank and Another Key Pick
Xilinx currently carries Zacks Rank #2 (Buy).
Another top-ranked stock in the broader Computer and Technology sector is Salesforce.com Inc (CRM - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Salesforce is pegged at 25%.
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