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Mellanox's InfiniBand Powers AMD's EPYC Server Processors

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Mellanox Technologies recently announced that its Ethernet and InfiniBand interconnect solutions are powering Advanced Micro Devices’ (AMD - Free Report) latest EPYC processors.

The company’s 25, 50 and 100G Ethernet and EDR InfiniBand accelerates EPYC’s capability to tackle increasing workloads related to Cloud, Web2.0, Big Data, Machine Learning, storage and high-performance computing (HPC).

AMD’s selection of Mellanox’s InfiniBand solution (more than 50% of the company’s top-line) will strengthen its competitive position against Intel’s (INTC - Free Report) Omni-Path solution. According to Mellanox, which quoted the TOP500 list, InfiniBand is the most used HPC interconnect in first half of 2017, connecting 2.5 times more new end-user projects versus Omni-Path, and three times more versus other proprietary products.

Moreover, InfiniBand provides 1.7 times higher system efficiency for Petascale systems versus Omni-Path. Further, InfiniBand connects 36% of the total TOP500 systems (179 systems).

We believe that demand for InfiniBand solutions has increased lately based on exponential data growth. Moreover, the recent strategic collaboration with Hewlett Packard (HPE - Free Report) will further boost InfiniBand’s penetration in the data centers.
 

The growing traction of InfiniBand will help the share price to recover in the rest of 2017. Mellanox has returned 7.7% as compared with the Zacks Electronics Semiconductors industry’s gain of 25.5%.



AI, Deep Learning: Key Drivers for Mellanox

Market research firm IDC forecasts that by 2025, the global datasphere will grow to 163 zettabytes (that is a trillion gigabytes), which is ten times the 16.1 zettabytes (ZB) of data generated in 2016. This exponential growth of data bodes well for Mellanox’s interconnect solutions owing to growing demand for higher network speeds for fast processing of the data.

InfiniBand is highly scalable and its off-loading capabilities that reduce load on CPU’s are attracting artificial intelligence (AI), machine learning and deep learning providers. The company recently announced that leading deep learning frameworks such as TensorFlow, Caffe2, Microsoft Cognitive Toolkit, and Baidu PaddlePaddle are now using the company’s offloading capability to provide high performance and near-linear scaling across multiple AI servers.

Mellanox has also noted multiple design wins in multiple platforms, which it anticipates to ship later this year and in 2018. These design wins include more than 20 AI projects globally, which is significant in our view.

However, stiff competition from Intel is the major  concern.

Zacks Rank & Key Pick

Mellanox carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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