For years, we have written about the continued growth and seemingly endless capability of the top data center companies to expand and add clients. Cloud software computing, huge amounts of video and audio streaming, massive levels of cloud storage and other factors have kept the ball rolling, and from all current indicators for the third quarter and beyond, no end is in sight.
In a new research report, Jefferies sees absolutely no slowdown in sight for the industry, which appears to have had a very solid third quarter. The report noted this:
Third quarter 2020 leasing volume exceeded our expectations, following a near-record second quarter that we knew would be difficult to match. It is becoming apparent that accelerated digitization driven by the pandemic is augmenting data center demand. Northern Virginia continued to make up a majority of absorption (93 megawatts), likely led by large hyperscale leases, in addition to enterprise demand.
The Jefferies semiconductor analysts always have correlated the data center capacity absorption as a key indicator for data center processor chip sales, and they noted this:
US leasing volume levels remain at elevated levels following a record-high second quarter 2020, higher than the 3-yr median absorption, and is consistent with our recent channel checks, suggesting slight deceleration in data center spending following a strong second quarter. We expect semi data center revenues to decline slightly in the third quarter as data centers undergo a brief period of digestion. Though, we think the analyst forecasts for third and fourth quarter 2020, including our own, might prove conservative given the elevated levels of leasing volumes.
DataCenter Hawk is a “one-stop-shop” for IT professionals, consultants, data center operators and investors to find data center and cloud solutions. The semiconductor team feels that continued strong Datacenter Hawk numbers are very positive for four top stocks rated Buy. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This top semiconductor company has been on fire and there are many reasons to believe the stock can go much higher. Advanced Micro Devices Inc. (NYSE: AMD) operates in two segments: 1) Computing and Graphics, and 2) Enterprise, Embedded and Semi-Custom. Its products include x86 microprocessors as an accelerated processing unit, chipsets, discrete and integrated graphics processing units (GPUs), and professional GPUs, as well as server and embedded processors, and semi-custom system-on-chip products and technology for game consoles.
The company’s market value now tops $100 billion, after its shares soared 89% this year as the coronavirus pandemic stoked demand for personal computers, gaming consoles and other devices that use the company’s chips. Second-quarter revenue rose 26% to $1.93 billion, while net income jumped more than fourfold to $157 million on the back of record notebook and server-processor sales.
AMD serves original equipment and design manufacturers, data centers, original design manufacturers, system integrators, distributors and add-in-board manufacturers through its direct sales force, independent distributors and sales representatives.
Note that, according to media sources, AMD is still in advanced talks to buy rival chipmaker Xilinx in a deal that could be valued at more than $30 billion and mark the latest big tie-up in the rapidly consolidating semiconductor industry.
Jefferies has a solid $95 price target on the shares, while the Wall Street consensus target is $80.78. Advanced Micro Devices stock closed Thursday’s trading at $83.13, above the consensus.
This small-cap company is a strong contender in the data center arena. Inphi Corp. (NYSE: IPHI) provides high-speed analog and mixed-signal semiconductor solutions for the communications, data center and computing markets worldwide.