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Analysts More Positive On Nvidia, AMD Following Processor Conference

GOOG, MCHP, NVDA, ADI, TXN | October 9, 2017

After attending Linley Group's annual processor conference in Santa Clara, California, last week, Bank of America Merrill Lynch analysts are more positive on NVIDIA Corporation (NASDAQ: NVDA) and Advanced Micro Devices, Inc. (NASDAQ: AMD).

Research analysts Vivek Arya, Adam Gonzales and Wills Miller believe Advanced Micro Devices is going to increase its presence in the servers market with its EPYC server technology. Intel Corporation (NASDAQ: INTC) announced the release of Xeon Scalable server processors, which offers only modest performance improvements over its predecessors. Advanced Micro Devices' chief architect highlighted that EPYC's multi-chip module and infinity fabric improve performance and lower manufacturing risk and cost versus Intel's products.

One of the takeaways from the conference is that Moore's Law is no longer providing the economic benefits it used to. Customers are pursuing efficiency gains by employing new architectures and by improving existing ones. Heterogeneous computing is emerging as the approach to combat slowing Moore's Law.

The conference also illustrated industrial IoT applications are booming, especially in Asia, while consumer IoT applications are experiencing a slow start due to higher costs, set up complexity and uncertain value proposition. The analysts believe large consumer brands like Apple Inc.
(NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) and Amazon.com, Inc. (NASDAQ: AMZN) are soon going to adopt these devices and applications. They named Texas Instruments Incorporated (NASDAQ: TXN), Microchip Technology Inc. (NASDAQ: MCHP), Cypress Semiconductor Corporation (NASDAQ: CY), Analog Devices, Inc. (NASDAQ: ADI), Intel and Nvidia as potential key beneficiaries.

Intel and Nvidia are also going to benefit from autonomous cars. Level 3 autonomy is going to be a standard for most cars by 2022 as costs are going to decrease, while level 4 vehicles are going to be available by 2020, but they are going to be more expensive.