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Mellanox's New Solutions to Enhance Data Center Performance

Zacks Equity Research

Mellanox Technologies, Ltd. MLNX recently unveiled ConnectX-6 Dx SmartNICs and BlueField-2 I/O Processing Unit (IPU) interconnect solutions at VMworld 2019, San Francisco, CA.

The solutions enable data centers with high performance, efficiency and security capabilities to handle massive scale workloads and accelerate mission-critical applications.

The company claims that the new offerings provide “highest” ROI (or return on investment) for telco, enterprise, and hyperscale architecture, compared with traditional networking storage solutions.

Increasing bandwidth and growing capacity of data centers in this connected data-intensive era are key factors facilitating the adoption of BlueField solutions. Further, SmartNICs utilized to virtualize and share flash storage make data centers more efficient.

The robust demand for company’s innovative products favor the prospects of the latest expanding SmartNIC and BlueField portfolio and are instilling confidence in the stock.


 

Notably, shares of Mellanox have returned 29.6% in the past year, substantially outperforming the industry’s rally of 15%.

Robust Features Favor Adoption

ConnectX-6 Dx SmartNICs offer a single port of 200Gb/s or, up to two ports of 25, 50 or 100Gb/s. The latest solution enables low latency, high message rate of up to 215 mpps (or million packets per second) with high throughput, and low CPU utilization, which accelerates connectivity in a secure manner.

Mellanox notes that availability of the latest SmartNICs is scheduled in later 2019.

Coming to BlueField-2 IPU, the solution utilizes Arm processor cores, and integrates the functionalities of ConnectX-6 Dx in a single SoC (or System-on-Chip). It can support both InfiniBand and Ethernet connectivity for up to 200Gb/s.

BlueField-2 SmartNICs utilizes NVMe SNAP storage virtualization capabilities to transform bare-metal clouds. Moreover, BlueField-2 offers high performance and efficiency to accelerate complex AI workloads at network edge platform or in the cloud.

The need to access and process data at a faster speed (25, 50 and 100 Gb/s) due to data growth in data centers is increasing demand for high-performance, efficient and secure storage solutions. This demand is a key to the adoption of Mellanox’s latest offerings.

Notable companies including the likes of Baidu BIDU, IBM IBM, F5 Networks, Red Hat, Lenovo, Nuage Networks, Ubuntu, among others are looking forward to implement the latest solutions to enhance their respective hardware systems’ efficiency and performance.

Moreover, NVIDIA NVDA, which is set to complete Mellanox acquisition by the end of calendar year 2019, remains optimistic on the latest product roll outs.

Growth Prospects Abound

Per Dell’Oro Group, as revealed in the press release, SmartNIC market is anticipated to hit $500 million at a CAGR of 40% by 2023.

Moreover, per recent IDC estimates, the global datasphere will grow to 175 zettabytes (that is a trillion gigabytes) by 2025, from 33 zettabytes in 2018. This exponential growth is expected to favor adoption of Mellanox’s latest interconnect solutions.

The aforementioned growth projections reinforce Mellanox’s business prospects. Incremental adoption of the new products is expected to boost the company’s financial performance.

Zacks Rank

Mellanox currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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