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The Zacks Analyst Blog Highlights: Microsoft, Facebook, Synopsys and Symantec

Zacks Equity Research
The Zacks Analyst Blog Highlights: Facebook, Twitter, Weibo and Alphabet

 

For Immediate Release

Chicago, IL –March 19, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft MSFT, Facebook FB, Synopsys, Inc. SNPS and Symantec Corp. SYMC.

 Here are highlights from Monday’s Analyst Blog:

Microsoft (MSFT), Facebook (FB) Team Up on Embedded Optics Technology

Microsoft and Facebook recently initiated Co-Packaged Optics (“CPO”) Collaboration as part of joint Development Foundation. The CPO Collaboration is aimed at providing end-to-end design guidelines and open specifications to suppliers.

The companies expect the guidelines to enable industry suppliers to accelerate manufacturing processes of co-packaged or embedded or on-board optics. Consequently, the final designed package can be embedded into the network switch’s PCB or printed circuit board.

Per the press release, “The collaboration has targeted the 51T switch generation as the tipping point for industry adoption of co-packaged optics.”

Eventually, the companies are aspiring to create a diverse and open design ecosystem with the CPO Collaboration.

To quote, Jeff Cox, executive director of the CPO Collaboration and partner director, Network Architecture, at Microsoft, "As co-founders of the Co-Packaged Optics Collaboration, Microsoft and Facebook invite customers and suppliers to join and collaborate with us."

Further, the CPO Collaboration will review and assess proposals (aimed at bolstering the adoption of open, technical solutions) put forward by optical and switch suppliers.

Optics on Chip: Need of the Hour

Growing hyperscale computing industry calls for the evolution of datacenter infrastructure. As a result, switch hardware designs are increasingly focusing on integrating optical connectivity directly into network-switching ASICs (application-specific integrated circuit).

With an aim to address greater networking demands of cloud service providers (or CSPs), network switch makers are exploring ways to utilize CPO technology.

Notably, Co-packaging or embedding optics directly with ASICs cuts down the length of switch-optic interconnects. This approach provides the industry players with robust cost-efficient interconnect solutions with improved use of silicon and reduced power consumption.

Per HTF data as revealed by MarketWatch, the optical interconnect market is expected to be $16.62 billion by 2023 at a CAGR of 20.9%.

What Investors Should Know?

Shares of Microsoft have returned 26.9% in the past year, outperforming the industry’s rally of 21.9%. This outperformance can be primarily attributed to company’s rapidly expanding efforts in AI and IoT based developments. Undisturbed focus on enhancing Azure capabilities remains a key catalyst.

The race to provide networking equipment solutions which are compatible with the emerging technologies and growing data-centric requirements is intensifying. The growing clout of optics to address emerging network infrastructure demands of power and density, primarily among CSPs deserves a special mention.

Microsoft is leaving no stone unturned to devise robust platforms aimed at realizing the potential of CPO technology.

In fact, the company recently open-sourced its Project Zipline. This will enable hardware developers to access algorithms and software tools enabling them to design cost-effective power-efficient high compression chips.

The company is also one of the founding members of The Consortium for On-Board Optics (COBO). COBO aims to “develop specifications for board-mounted optical modules.”

With these innovative initiatives, Microsoft is anticipated to strengthen the hardware infrastructure capabilities of Azure’s data centers. The latest collaboration with Facebook bodes well in this regard.

Zacks Rank & Key Picks

Microsoft currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry are Synopsys, Inc. and Symantec Corp., both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Synopsys and Symantec is projected at 10% and 7.9%, respectively.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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