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Chipzilla stands to lose more ground to its smaller rival courtesy of the Ryzen 5000.

Advanced Micro Devices (NASDAQ:AMD) has been in a thorn in Intel’s (NASDAQ:INTC) side in the central processing unit (CPU) market since the arrival of the former’s Ryzen processors, which originally hit the market in March 2017.

AMD held just under 18% of the CPU market at the end of 2016 before Ryzen arrived. The latest third-party estimates suggest that the chipmaker now controls close to 37% of the market. Other reliable estimates from the likes of video gaming platform Steam also suggest that AMD has been consistently chipping away at Intel’s CPU dominance.

And AMD isn’t done hammering Intel in CPUs just yet — especially since the arrival of its latest Ryzen 5000 CPUs. Here’s why.

Ryzen 5000 could widen AMD’s advantage over Intel

Intel has historically enjoyed an advantage over AMD when it comes to single-thread CPU performance, which is considered more important for both average users and gaming enthusiasts. But AMD has recently been plugging the single-threaded performance gap by boosting the clock speed of its CPUs.

AMD may have exceeded Intel on that front with the new Ryzen 5000 processors. According to tests conducted by AnandTech, the AMD Ryzen 9 5900X processor, based on the latest Zen 3 microarchitecture, scores 6% higher than Intel’s competing Tiger Lake-based Core i7 chip in single-threaded performance.

As compared to the previous-generation Ryzen 9 3950X (based on the Zen 2 architecture), AMD has managed to deliver a 17.8% single-threaded performance increase this time. With this, AMD may have reclaimed the single-threaded performance crown after more than a decade.

According to AMD’s own claims, a high-end Ryzen 5000 processor can deliver a 26% jump in gaming performance over the previous-generation chip. AMD also claims that the chip is 7% faster in gaming performance than the competing Intel chip.

But the increased performance will now come at a price. AMD seems to have ditched its earlier strategy of undercutting competing Intel chips, and is boosting prices of the Ryzen 5000 processors across the board compared to the prices of their predecessors. Clearly AMD is looking to translate its single-threaded performance advantage into more dough. But is it the right thing to do?

Chipzilla’s struggles could be a boon for Ryzen 5000

Now that AMD seems to have eclipsed Intel in single-threaded performance, it is not surprising to see the company ask for a premium from consumers. The chipmaker is now in a good position to hike prices considering its growing clout in the CPU market and the technological advantage that its chips enjoy over Intel.

AMD’s Ryzen 5000 processors are based on a refined version of the 7-nanometer (nm) process used in the previous-generation Zen 2 processors, allowing the chipmaker to deliver improved performance and speed gains. Intel, on the other hand, is expected to remain stuck on a 14nm process when it brings out its 11th-generation Rocket Lake desktop processors in the first quarter of 2021.

Rumors suggest that Intel may not launch its 12th-generation 10nm Alder Lake processors until the second half of 2021 to compete with AMD’s 7nm process. So AMD is likely to continue enjoying a technology lead over Intel, especially considering that it could make the move to a 5nm manufacturing process with the Zen 4 microarchitecture by the end of 2021, according to rumors.

As such, don’t be surprised to see AMD continuing to eat Intel’s market share, and remaining a top growth stock in the future thanks to a combination of improved CPU sales and stronger pricing power.

Author: Harsh Chauhan

Source: Fool: AMD Is Leaving Intel in the Dust, and It Isn’t Done Yet

Investors shouldn’t miss an opportunity to scoop up these two companies if they fall victim to another broad market sell-off.

The first week of September wasn’t a good one for the stock market. Fears of a rerun of the March crash reared their ugly head toward the end of the week, and major indices pulled back after a strong run over the past few months.

Investors decided to dump high-flying names in a bid to book profits before things go further south, which is not surprising as according to historical trends, September is often a painful month for the stock market. But history tells us that buying stocks when the market is undergoing a correction could be a smart thing to do. That’s why it would be a good idea for investors to keep an eye on NVIDIA (NASDAQ:NVDA) and Chewy (NYSE:CHWY) — two stocks that have pulled back recently but have done well during the coronavirus-induced slowdown across the globe.

DATA BY YCHARTS.

NVIDIA’s two biggest businesses are booming

NVIDIA has gone from strength to strength this year, thanks to terrific demand for its graphics cards in the PC gaming and data center markets.

The company’s top line jumped 50% year over year in the fiscal 2021 second quarter that ended on July 26. Gaming revenue was up 26% year over year to $1.65 billion, accounting for nearly 43% of the top line. The data center segment surged to the top with 167% growth (including revenue from Mellanox) to $1.75 billion.

NVIDIA is guiding for $4.40 billion in revenue this quarter, an increase of 46% over the prior-year period. More importantly, the graphics specialist should be able to sustain its momentum for a long time as its two key businesses are riding powerful tailwinds.

The company recently released its latest generation of graphics cards based on the Ampere architecture. The new RTX 30 series GPUs (graphics processing units) deliver significant performance gains at competitive price points. NVIDIA claims that they can “deliver up to 2x the performance and 1.9x the power efficiency” over the previous generation Turing cards, giving the company’s installed user base a big reason to upgrade.

As it turns out, most NVIDIA users are currently using older generation graphics cards. The company had revealed last year that half of its installed base was using Pascal GPUs that were originally released in 2014. The Turing cards were only 2% of the total installed base, and 48% were using GPUs older than Pascal. So the new Ampere GPUs could trigger a huge upgrade cycle thanks to the promised performance gains and their pricing, paving the way for stronger growth in NVIDIA’s gaming business.

Meanwhile, NVIDIA’s data center business has room to run higher too. Its addressable opportunity in that market should increase at a rapid pace thanks to higher demand for GPU accelerators, driven by an increase in artificial intelligence workloads and hyperscale data centers. So don’t be surprised to see NVIDIA maintain its rapid growth rate in the forthcoming quarters as its two largest segments can keep trending higher.

Chewy is taking advantage of a shift toward online pet retail

The novel coronavirus pandemic has turned out to be a blessing in disguise for Chewy’s business. The online pet retailer has seen a surge in orders in recent months as spending on pet supplies seems to be shifting online at a faster pace. The company’s customer base is growing rapidly, and net sales per active customer are also increasing.

That’s not surprising as pet parents have been spending more money to stock up supplies amid the pandemic. Chewy estimates that it could hit $6.60 billion in sales this year, a 36% jump over last year’s top line of $4.85 billion. But more importantly, Chewy’s growth story will last longer than the pandemic as the COVID-19 outbreak has simply accelerated the shift to online pet retail.

Third-party numbers indicate that online purchases of pet products has been growing rapidly since 2014. While the number of households that bought pet products at physical stores increased just 1% in 2014, the online segment jumped 77%. And in 2018, households shopping online jumped a whopping 275%, compared to 14% for in-store retail. The reasons behind the shift are simple: convenience to purchase from anywhere, competitive pricing, and wider product selection, among others.

More importantly, Chewy’s addressable market is likely to keep growing as online sales reportedly accounted for 18% of the pet retail industry last year, according to research from Packaged Facts. That proportion is expected to increase in the coming years and give Chewy more room to grow sales.

In all, Chewy can enviably sustain its growth in the coming years. That’s why it may be a good idea to take advantage of any dips in the stock, which is currently trading at 5.2 times trailing 12-month sales. Investors looking to scoop up a growth stock at a more attractive price in the event of a market downturn should keep Chewy in their sights, as it has room to run higher.

Author: Harsh Chauhan

Source: Fool: 2 Top Growth Stocks to Buy in a Market Crash 2.0

Rapid market share growth in the data center space could be a major tailwind for AMD.

The data center market has turned out to be a happy hunting ground for Advanced Micro Devices (NASDAQ:AMD) ever since the company reentered it in 2017 with its EPYC server processors.

The chipmaker has likely given Intel (NASDAQ:INTC) some sleepless nights since then, and AMD is showing no signs of slowing down. A recent report claims that AMD’s latest-generation Rome server processors have doubled their presence in Amazon’s data centers quickly, which is not surprising considering the chipmaker’s technology advantage over Intel.

However, this isn’t the only favorable development for AMD’s server processors in recent months. The company has scored other notable wins in the data center market — including the likes of Lenovo and NVIDIA — and the latest developments indicate that more OEMs (original equipment manufacturers) are turning to its server offerings.

AMD has hit 10% server market share ahead of schedule

AMD CEO Lisa Su pointed out during the latest earnings call that the company has met its “double-digit server processor market share goal.” Analysts had expected AMD to take until the end of the year to hit that mark, but it seems like the chipmaker needed just six months to more than double its server market share, which was 4.5% at the end of 2019, according to Mercury Research’s estimates.

This indicates that server OEMs and cloud service providers have ramped up the adoption of AMD’s chips this year. Technology news website CRN recently reported that Hewlett Packard Enterprise is enjoying “major price-performance advantages” in its virtual desktop infrastructure applications.

According to HPE, the deployment of AMD’s Rome server chips has slashed virtual desktop costs per worker in half. Similarly, Google has built its Confidential Virtual Machines platform using AMD’s second-generation EPYC processors and not Intel’s Xeon, citing advantages such as scalability and ease of use.

These rapid gains in the data center space have translated into strong financial growth for AMD. The company generated over 20% of its second-quarter revenue from data center products as sales of EPYC server processors more than doubled from the prior-year period. What’s more, the market share gains in server processors and other segments encouraged AMD to boost its annual guidance.

Not surprisingly, AMD stock has hit all-time highs in August, but the company could keep pushing the envelope, making an even bigger dent in the data center market and further boosting its top line.

Aiming for more data center gains

AMD was a big player in the data center space years ago. From 2004 to 2006, the company’s data center market share had zoomed from just 7% to a sizable 26%, as pointed out by Bank of America analyst Vivek Arya on the latest earnings call.

Replicating such market share growth in the next couple of years could give the company a huge top-line boost. The data center business produced about $1 billion of AMD’s total revenue last year. Last quarter, its contribution increased to more than a fifth of the total revenue, as discussed earlier, which translates into roughly $390 million given the total quarterly revenue of $1.93 billion.

So AMD’s data center business currently has an annual revenue run rate of approximately $1.5 billion — on track for a 50% improvement over 2019. The chipmaker expects data center-related products to supply more than 30% of its overall revenue in the long run, which means that it is gunning for further market share growth in this segment.

It wouldn’t be surprising to see AMD achieve that and take a bigger bite out of Intel’s pie as its next-generation Zen 3 server processors start shipping later this year. And according to AMD’s product roadmap, the company plans to release Zen 4 server processors based on a 5-nanometer (nm) manufacturing process by 2022.

Intel, on the other hand, has delayed its competing 7nm data center processors to 2023. This should give AMD an opportunity to corner more of the server processor market, which is expected to be worth $19 billion by then per the company’s estimates. So if AMD manages to increase its server processor market share to 20% by 2023, its data center revenue would quadruple compared to last year’s levels and help the company sustain its terrific growth.

Author: Harsh Chauhan

Source: Fool: AMD Could Make Billions More From This Market Going Head-to-Head With Intel

These tech companies can win big from the 5G rollout.

The deployment of 5G networks is still in the early phases, and a lot of money remains to be spent on the latest wireless technology as telecom carriers roll it out to more markets across the world. Not surprisingly, 5G infrastructure investments are expected to jump from $9.8 billion last year to $58 billion by 2026, clocking a compound annual growth rate of 29%, according to third-party estimates.

Ciena (NYSE:CIEN) and NVIDIA (NASDAQ:NVDA) are two ways investors can take advantage of that massive spurt in infrastructure spending. Both companies provide technologies that are critical to the efficient functioning of 5G networks. Let’s see why these two could turn out to be top 5G stocks in the long run.

IMAGE SOURCE: GETTY IMAGES.

1. Ciena can benefit from the backbone of 5G networks

Setting up 5G networks requires the deployment of optical fiber networks to support the massive increase in bandwidth, reduce latency, and reduce power consumption. Telecom operators reportedly spent over $144 billion to upgrade the legacy mobile backhaul network infrastructure to optical fiber between 2014 and 2019, as they made the shift to 4G.

Optical fiber networks are a necessity for 5G networks because they can offer unlimited bandwidth. Theoretically, 5G networks can support speeds up to 20GB per second as compared to 4G’s peak speed of 1GB per second. As a result, the fiber optic cable market’s revenue is expected to double from 2019 to 2025, according to third-party estimates, paving the way for Ciena to boost sales of its 5G networking solutions.

The company announced a range of 5G solutions earlier this year, such as 5G-optimized routers, 5G network automation software, and transport networks to hook up cell sites with each other and the core network, as well as to data centers. The good part is that Ciena is already working with leading telecom operators around the world. Its clients include top Indian telecom operators such as Reliance Jio, Bharti Airtel, and Vodafone-Idea.

In the U.S., Ciena has helped Verizon quadruple its fiber capacity to support 5G networks. Telefónica U.K. has also decided to use Ciena’s packet transport solution to upgrade its legacy network to support 5G. All of this indicates that Ciena is right in the middle of the 5G revolution, and things should get better as deployments gather pace.

Even more importantly, Ciena controls nearly a quarter of the optical network hardware market, and it has consistently increased its share over the years. So it’s in a nice position to take advantage of the market’s secular growth as 5G networks come online across the world, which should allow Ciena to sustain the impressive top- and bottom-line growth it has clocked of late.

CIEN REVENUE (TTM) DATA BY YCHARTS

And finally, Ciena’s valuation is another reason to go long. Its price-to-earnings (P/E) ratio of 26 is lower than the five-year average multiple of nearly 56, which makes it an attractive 5G bet considering the potential acceleration in earnings as seen in the chart above.

2. NVIDIA is solving a crucial problem

NVIDIA specializes in graphics cards that power computers and data centers, as well as speed up 5G networks. In October of last year, NVIDIA announced that it is partnering with telecom giant Ericsson to make 5G networks more efficient and smarter with the help of GPUs (graphics processing units). More specifically, the two companies are looking to “build high-performing, efficient, and completely virtualized 5G radio access networks (RAN).”

NVIDIA aims to use this partnership to plug gaps in the current network infrastructure where carriers are unable to deploy bandwidth according to real-time requirements. A 4G network that’s aimed to work at peak capacity to ensure seamless voice and data access with the help of dedicated hardware runs the risk of underutilization if there aren’t enough users in that area.

The bandwidth wastage could be much higher in the case of a 5G network, which is why networks will have to be made more intelligent. This is where NVIDIA’s GPUs come into play. They can help telecom carriers deploy software-defined virtual radio access networks (vRAN) that run on virtual machines.

The advantage of vRAN is that applications that are running on a virtual machine can be moved to another machine if needed. This allows telecom operators to intelligently transfer bandwidth from one place to another, thereby reducing both operating and capital expenses substantially. Not surprisingly, the vRAN market is expected to grow at an annual pace of 128% through 2024, according to third-party estimates.

Moreover, 5G is expected to create the need for smaller data centers to ensure low latency and faster processing times. This could boost demand for data center GPUs because they will play a key role in accelerating workloads locally for applications such as self-driving cars and the Internet of Things.

NVIDIA’s data center business supplied 37% of its total revenue last quarter and grew nearly 80% year over year. The rollout of 5G can give NVIDIA a nice shot in the arm and may turn out to be yet another catalyst for this high-flying tech giant that’s already growing at a terrific pace.

Author: Harsh Chauhan

Source: Fool: 2 Top 5G Stocks You Should Be Buying Right Now

The economic impact of coronavirus has triggered a liquidity crunch that could force more Americans to unload their properties. But what if there are no buyers?

  • New homes in the U.S. are being listed at a discount.
  • The lack of liquidity could force more sellers to list their properties at lower prices.
  • Uncertain times ahead for the U.S. housing market as the coronavirus wrecks the economy.

The novel coronavirus pandemic is about to wreak havoc on the U.S. housing market. That is evident from Weiss Analytics’ latest report, which indicates a sharp decline in the asking price of newly-listed homes.

The report says that 25% of homes listed for sale are priced at a discount compared to pre-COVID-19 levels. This is not surprising, as housing sales have been plunging in the wake of the pandemic, which has probably forced sellers to list their properties for less to attract buyers.

Lower List Prices Point To Potential Crash

Weiss Analytics says that 30% of homes priced at $200,000 or less have been listed at a median discount of 6.3% compared to February. On the other hand, 37% of homes with a value of $600,000 or more have been listed at a median discount of 7.7%.

The price decline coincides with a drop in new home listings. Zillow estimates that listings of high-end homes have dropped 46%. Affordable homes have witnessed a 32% drop in new listings.

According to data from real estate listing firm Redfin, there was a sharp annual decline of 22.7% in home sales last month. At the same time, new listings plunged 41% annually in April. Housing inventory also declined by 21%.

Sales and inventories have plunged as real estate heads for a potential disaster. | Source: Redfin

Despite these headwinds, the median sale price increased 5% year-over-year to $304,000 during the month. But that’s not an indicator of long-term strength, as homes originally contracted for sale in prior months would have pushed prices higher.

The discounted rate of new listings provides a better idea of where the housing market is headed. It won’t be surprising to see sellers offer bigger discounts in the coming months as buying a home becomes more difficult despite low mortgage rates.

Prices Set To Go Further South

Housing market bulls believe that low mortgage rates in the U.S. will be a tailwind and help attract buyers. But that’s not a given as banks are tightening lending criteria in light of the worsening employment scenario.

The unemployment rate has spiked as coronavirus wreaks economic havoc. | Source: TradingEconomics

The novel coronavirus pandemic has led 36.5 million Americans to file for unemployment claims over the past eight weeks. Consumer spending has taken a beating, and it is likely that outlays on big-ticket items such as a house will decline.

This has created fear among banks, which have decided to withdraw certain housing-related financial products in light of the employment crisis.

Declining employment prospects and a dismal macro environment could result in a flight to liquidity. In such a scenario, homeowners may be forced to put their houses on sale to get access to cash.

But getting a loan may not prove to be easy, and the number of potential buyers may not be big enough thanks to weak employment conditions. As a result, sellers may compete against each other to unload properties, resulting in higher discounts.

The recent drop in list prices indicates that the U.S. housing market may have started crashing already. But this may just be the beginning as the true impact of COVID-19 takes time to play out.

Author: Harsh Chauhan

Source: CCN: The U.S. Housing Market Crash Has Begun, Unofficially

Weak commercial real estate and a slew of store closures could send the U.S. housing market into a tailspin and cause a crash.

  • UBS is trying to save its real-estate fund from huge redemptions.
  • UBS’ troubles indicate that something greater is amiss with the U.S. housing market.
  • Store closures and loss of employment could trigger the next crisis.

The U.S. housing market is enjoying terrific price appreciation thanks to a lack of homes available for sale, but that isn’t preventing investors to take money off the table from commercial real estate funds. Last week, it emerged that UBS’ $20 billion flagship real-estate fund is on the verge of witnessing $7 billion in withdrawals.

The UBS Trumbull Property Fund has received redemption requests that could see more than a third of the vehicle’s value being diminished. In a last-ditch attempt to arrest the outflow at the underperforming fund, UBS is reportedly looking to let go of management fees and reduce costs for investors.

At the same time, UBS is reportedly putting the fund’s office and retail assets for sale, which currently accounts for 27 percent and 20 percent of the overall value, respectively. Instead, UBS is now looking to increase the fund’s exposure to apartments from the current 34 percent. But this change in gear by UBS at its landmark real-estate fund could end up having a negative impact on the U.S. housing market.

UBS’ Landmark Fund Could Trigger A U.S. Housing Market Crisis

The reason why investors have decided to pull out of the fund is simple – underperformance. The returns from the fund have averaged lower than the benchmark index over a period of one, three, and five years, as reported by CNBC. The problem is that the redemption requests could force UBS to offload properties at a cheaper rate to meet investors’ obligations, and that’s where the problem for the U.S. housing market lies.

For instance, selling commercial real estate such as malls and offices on the cheap could have a domino effect on the price of residential real estate in that area. This could knock the wind out of the U.S. housing market that’s riding high on price appreciation on the back of tight inventories thanks to negative perception.

But this is not the only reason why the weakness in real estate prices could wreck the U.S. housing market rally. UBS’ troubles point toward a far bigger problem that’s affecting the real estate market in the U.S. and has the potential to negatively impact the housing market as well.

The Bigger Problem

The perception of weak commercial real estate prices is just one simple way how the U.S housing market could be impacted by the redemptions at UBS. But the bigger problem is that the redemption requests make it clear that the value of commercial real estate such as malls is not in the pink of health.

This is evident from the fact that retail store closures in the U.S. reached a 10-year high last year. Over 10,600 stores reportedly downed their shutters in 2019. The trends don’t look promising in 2020 either as Macy’s is looking to close 125 stores, Wayfair has already laid off 550 employees, and J.C. Penney recently announced that it is closing a mall store.

The bad news is that UBS estimates that an additional 75,000 stores in the U.S. could down their shutters by 2026. This means that more job losses are in the cards, and this is something that the U.S. housing market does not want.

According to a recent report by the National Association of Realtors (NAR), the median price of an existing single-family home in the U.S. jumped 6.6 percent in the fourth quarter of 2019 to $274,900. This jump in prices in the U.S. housing market coincided with a 12 percent drop in supply, with housing inventory dropping to a three-year low during the quarter.

Lawrence Yun, the chief economist of NAR, sees this massive jump in prices and dwindling inventories as a problem. He said:

It is challenging – especially for those potential buyers – where we have a good economy, low-interest rates and a soaring stock market, yet are finding very few homes available for sale,” Yun said. “We saw prices increase during every quarter of 2019 above wage growth.

That last line explains just what’s wrong with the U.S. housing market. Consumers have been resorting to the mortgage market to take advantage of low rates. But the reality is that housing affordability in the U.S. has been on the wane as price growth has outpaced wage growth.

This is a challenge that the U.S. housing market faces as a slew of recent layoffs in the U.S., including a big one at U.S. steel, could eventually force consumers to think twice before buying a new house. This will weaken demand for homes and eventually lead to weak pricing. What’s more, retail store closures will be another headwind as they have the potential to weigh on prices by building a negative perception.

This is why if UBS fails to stymie the outflows from its real-estate fund and starts dumping properties on the market, it could trigger what could very well become the next U.S. housing market crisis in the future.

Author: Harsh Chauhan

Source: CCN: This $20 Billion Time Bomb Could Trigger Next U.S. Housing Market Crash

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