Broadcom Corporation (BRCM), Advanced Micro Devices, Inc. (AMD): Forget PC Weakness, Intel Corporation (INTC) has a Real Shot in Networking

AMD is paying $334 million for SeaMicro, which, until now, was in a tight partnership with Intel to develop dense servers. AMD plans to sell SeaMicro-branded servers and license to customers its fabric technology, which virtualizes I/O and ties together storage and networking. The deal is expected to close this month.

SeaMicro provides Advanced Micro Devices, Inc. (NYSE:AMD) an instant presence in the nascent, but fast-growing, dense server market and Intel will now be playing catch-up, analysts said. AMD’s purchase of SeaMicro was an unexpected but smart move, said Nathan Brookwood, principal analyst at Insight 64. The dense server market is growing, as companies look to curb electricity costs by deploying low-power servers to respond to Web and database queries.

Meanwhile, FBR Capital‘s hardware and software analysts this week issued a broad overview piece on how they view emerging datacenter technologies, such as “microservers” and software-defined networks. According to them Broadcom Corporation (NASDAQ:BRCM) has a lot of upside from networking:

While Broadcom’s mobile and wireless division gets most of the attention, the company has established an extremely comprehensive portfolio of networking technologies. We do not expect Broadcom to enter the microserver SoC market in the near term, as the company traditionally waits for markets to develop and then moves quickly to integrate its portfolio of discrete technologies and close the technological gap. However, we recognize Broadcom’s incredibly strong portfolio of complementary technologies, as well as its ARM v8 architectural license, and may only assume that it would forcefully enter the microserver market were it to inflect. Additionally, Broadcom remains a strong beneficiary of the movement toward merchant switching silicon and is extremely well positioned to benefit from the adoption of software-defined switches (although, we note that Intel may be a formidable foe here someday).

The Bottom Line

Intel Corporation (NASDAQ:INTC) has tremendous opportunity in networking and datacenter, which will lead the company to generate billions in revenue in the long run. I feel any dip in Intel’s stock following Citigroup’s recent announcement should be utilized as a buying opportunity for long-term investors.

The article Forget PC Weakness, Intel has a Real Shot in Networking originally appeared on Fool.com and is written by Anindya Batabyal.

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