Close

Morgan Stanley Raises Xilinx (XLNX) to 'Overweight' as Investors Shift Focus to Artificial Intelligence

December 15, 2016 6:31 AM EST
Get Alerts XLNX Hot Sheet
Price: $194.92 --0%

Rating Summary:
    8 Buy, 28 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 10
Join SI Premium – FREE

(Updated - December 15, 2016 10:08 AM EST)

Morgan Stanley upgraded Xilinx (NASDAQ: XLNX) from Equalweight to Overweight with a price target of $67.00 (from $46.00). Analyst Joseph Moore thinks machine learning could change the way investors look at the stock. He also anticipates revenue share gains.

Moore explained, "A year ago, the focus of some Xilinx bulls was the high strategic value of the company's franchise in the context of a consolidating industry; the stock has modestly underperformed the substantial semiconductor rally since then, as M&A activity has focused on other subsectors. And yet, the fundamental outlook for the company has improved, we think, for 3 reasons: 1) as machine learning continues to evolve, we see the market for 'inference' moving away from microprocessors and towards specialty solutions, including Xilinx FPGAs (as well as graphics and other specialty chips); 2) potential for share gains is improving as we have seen the company stretch its lead over Intel/Altera in the two most recent manufacturing nodes; and 3) we generally see the overall growth in FPGAs modestly improving, as base stations fade in importance and new technologies start to penetrate autos, factories and data centers."

Discussing machine learning, the analyst said, "2016 was a year where machine learning 'training' became a major driver, primarily benefiting graphics leaders NVIDIA and AMD. In 2017, we should see the beginnings of specialized hardware for “inference” – using those graphics-trained neural networks in a real time environment. Somewhat to our surprise, our checks show that Xilinx is emerging as a leader in this segment. The announced win with Amazon Web Services a couple of weeks ago was largely ignored by the market, yet was clear evidence that Xilinx was able to win a socket competing head to head with Altera at one of Intel's most important customers. It’s a small revenue driver in 2017, but one that opens up a window to a large potential opportunity."

For an analyst ratings summary and ratings history on Xilinx click here. For more ratings news on Xilinx click here.

Shares of Xilinx closed at $56.73 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades

Related Entities

Morgan Stanley