Micron shows how the cloud is saving chip makers


Memory-chip maker Micron Technology Inc. was saved by a boom in data centers, adding to chip makers’ growth as the pandemic forces more companies to expand their cloud computing capabilities.

On Monday, Micron
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+1.35%

reported better-than-expected fiscal second-quarter earnings and had a stronger outlook for the next quarter, despite some issues with the global supply chain due to the COVID-19 pandemic. Micron’s shares jumped nearly 6% in after-hours trading. At Monday’s close, Micron was trading at $49.15, down 8.62% for the year but a huge recovery from its plunge in March, when it hit a low of $31.13 in the early days of the pandemic.

“We continue to see healthy demand trend in cloud in the second half of the year,” Micron Chief Executive Sanjay Mehrotra told analysts on a conference call. “Cloud is still actually in early innings, and long-term trends for cloud are strong.” In the second quarter, the company said that the work-from-home economy, e-commerce and videogame streaming all drove a strong surge in demand for more cloud-computing capabilities.

Micron’s comments echo those that other chip giants, such as Intel Corp.
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and Nvidia Corp.
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made last quarter. On Monday, Xilinx Inc.
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+1.03%

joined the crowd when it updated its guidance for its fiscal first quarter, noting that strong performance in wireless and data center were offsetting weakness in consumer segments.

In the second half of the year, Micron said that it expects demand for consumer technology products such as PCs and smartphones to improve. That’s in part due to the ongoing rollout of 5G networks, which will drive demand of new smartphones that have more dynamic random access memory (DRAM) chips, compared to 4G-network phones. The company said that average selling prices of both DRAM chips and NAND flash memory were up sequentially from the previous quarter.

One issue hovering over the company, and indeed most chip makers, is the growing rise in inventories, both by Micron and its customers, especially in the smartphone market. When asked by an analyst about the growing inventories, Mehrotra said its customers are trying to prepare for when consumer demand returns.

“Customers want to be prepared to supply the smartphone demand” when it returns, he said. “So, overall, you know, it’s a mixed picture with respect to the inventory on the customer front. Cloud inventories are in decent shape,” while mobile inventories are “somewhat in anticipation of demand.”

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The chip industry has been amazingly resilient during the coronavirus pandemic, and most of the demand is due to data centers and the demand for more cloud computing. If the PC and smartphone markets return to growth, there could be even more upside for chip makers such as Micron. But for now, the sure thing is centered around the data center.



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Nvidia data-center sales top $1 billion for first time, earnings beat expectations


Nvidia Corp.’s data-center sales topped $1 billion for the first time at the start of 2020 as the company beat expectations for earnings and sales, but shares were sluggish in late trading Thursday following nearly a week of record closes.

Nvidia
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-2.17%

reported first-quarter net income of $917 million, or $1.47 a share, compared with $394 million, or 64 cents a share, in the year-ago period. Adjusted earnings were $1.80 a share, compared with 88 cents a share in the year-ago period. Revenue rose to $3.08 billion from $2.22 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $1.65 a share on revenue of $2.97 billion. Nvidia had forecast revenue of $2.94 billion to $3.06 billion, which had factored in a $100 million headwind from the COVID-19 pandemic.

Shares shifted between slight gains and losses, and were last down 1% in after-hours trading, following a 2.2% decline in the regular session to close at $351.01. Thursday’s regular session was the first decline for Nvidia’s stock after a run of four consecutive closes at record highs.

Business in the Age of COVID-19: Nvidia should dodge coronavirus effects thanks to data centers and videogames

Nvidia’s two largest segments are chips for gaming and data centers, both of which seem safe from negative effects from the coronavirus pandemic after emerging from a year of struggle at the end of 2019. Data-center operators continue to push new chips into their servers to increase machine-learning capabilities for cloud customers and their own usage, while videogames have enjoyed a strong surge amid shelter-in-place requirements.

Nvidia launched new data-center products like its A100 graphics-processing unit last week as part of its annual GTC event, introducing a new architecture for its GPUs, dubbed Ampere. Chief Executive Jensen Huang said then that the new chips were already being shipped to customers, including the largest cloud-computing offerings such as Amazon.com Inc.’s
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Amazon Web Services, Microsoft Corp.’s
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Azure and Alphabet Inc.’s
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Google Cloud.

For more: Nvidia unveils Ampere GPU architecture for AI boost, and the first target is coronavirus

Nvidia reported gaming revenue of $1.34 billion, up from $1.06 billion in the year-ago period. Data center revenue came in at $1.14 billion, the first time the segment has cleared $1 billion in sales. That’s up from $634 million a year ago. Analysts had expected a 24% rise in gaming sales to $1.3 billion from a year ago, and a 62% surge in data-center sales to $1.03 billion.

“Cloud is a $100 billion market segment of IT today, growing at 40% into a $1 trillion opportunity,” said Jensen Huang, Nvidia founder and chief executive, on a conference call. “Cloud computing is the single largest IT industry transformation that we have ever seen. The two forces that are really driving our data-center business are AI and Cloud computing. We’re perfectly positioned to benefit from these two powerful forces.”

Nvidia expects second-quarter revenue of $3.58 billion to $3.72 billion, while analysts had forecast revenue of $3.25 billion.

Patrick Moorhead, principal analyst at Moor Insights & Strategy, called the quarter “phenomenal” given the pandemic.

“The A100 data-center training/inference product appears to be off on a rocket-ship start, a very good sign,” said Moorhead in emailed comments. “Gaming and workstation growth are directly tied to competitive products and the need to work, govern and school from home.”

Nvidia shares are up 49% for the year. In comparison, the PHLX Semiconductor Index
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is down 3% in 2020, the S&P 500 index
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is down 9%, and the tech-heavy Nasdaq Composite Index
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is up nearly 4%.

Of the 40 analysts who cover Nvidia, 32 have buy or overweight ratings, five have hold ratings, and three have sell ratings, along with an average price target of $325.18, according to FactSet data.



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Tech conferences are going virtual, and it feels like Netflix content on demand


The changing face of major tech conferences came in the form of a live-streamed speech on my computer screen Tuesday morning.

In it, Microsoft Corp.
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Chief Executive Satya Nadella laid out his vision for “empowering every developer.” His 20-minute speech was followed by a series of live and prerecorded tutorials on coding, cloud computing, and other geeky topics from TV-like studios on the Microsoft campus, buttressed by slick graphics and pretaped videos, all day and night. And all of it was free, with easy access to 509 sessions and documentation. The two-day conference had the look and feel of content-on-demand a la Netflix Inc.
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-2.55%

A week earlier, Nvidia Corp.
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-2.17%

Chief Executive Jensen Huang delivered a two-hour keynote at GTC Digital in nine 12-minute slices, based on topics ranging from autonomous vehicles to artificial intelligence. The presentation, taped in Huang’s kitchen, attracted 4 million views. This year, 57,000 developers signed up to attend; last year, 10,000 physically attended the conference in San Jose, Calif.

Such is the new world of tech conferences in the age of COVID-19. They’ve gone all-digital, like Build and GTC Digital, and may never be the same. Absent a vaccine, the days of thousands of people herded into hotel ballrooms and convention centers like cattle, sharing cabs and eating in cramped quarters, are gone.

Far from crippling the tech industry, however, virtual shows could lead to democratization of what had once been an exclusive, pricey privilege for tech movers and shakers. In the new climate, consumers have free access to valuable technical content whenever they wish to view it.

“This will definitely change the approach of tech conferences. Virtually, you can identify attendees online and track what they see,” Paddy Cosgrave, chief executive of the company that runs the Web Summit and Collision conferences, told MarketWatch in a phone interview Monday. The show, originally planned June 22-25 in Toronto, will go on as an all-digital event those days.

“If the show is pure content and not networking, like an F8 or Build, you can upsell to them virtually,” he said. “F8, AWS, and Build are like infomercials, selling to an existing customer base.”

“Without question it was a better experience: free, no red-eye flight, no hotel room charges, and better access to the Microsoft team,” Laron Walker, CEO of Mantisedu Inc., an Atlanta-based education hardware partner of Microsoft, told MarketWatch in a phone interview. “Last year, I paid several thousand dollars to attend, and if I was late for a session, I couldn’t rewind it. This year, I could.”

Walker, 41, said he was able to view sessions at any time, pause them to take notes, and then pass them on to co-workers. He was also able to connect with Build speakers via LinkedIn and email because he had more information about them via their presentations. “This made me look at tech conferences in a whole new light,” he said.

Developers conferences are as much an annual ritual in the tech industry as Apple Inc.
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product launches and gargantuan shows like CES and Mobile World Congress. All told, they set the narrative for developers and, eventually, consumers over the next year or two.

May is usually the epicenter of such gatherings. Before COVID-19, executives, analysts, business partners, and the press had scheduled their travel schedules to attend Microsoft’s Build (May 19-21, in Seattle), Google parent Alphabet Inc.’s
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I/O summit (May 12-14, Mountain View, Calif.), and Facebook Inc.’s
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F8 (May 5-6, in San Jose).

Two of those shows were dropped while a third will be vastly restructured. For example:

Apple: “We are delivering WWDC 2020 this June in an innovative way to millions of developers around the world, bringing the entire developer community together with a new experience,” Phil Schiller, Apple’s senior vice president of Worldwide Marketing, said in a statement May 5. “We look forward to sharing more details about WWDC20 with everyone as we get closer to this exciting event” on June 22. The event is free for all developers.

Facebook: The company, which has vowed not to host events of more than 50 people until June 2021, is “still working through what F8 and more broadly what FB’s events/conference approach will be beyond June 2021,” a company spokesperson told MarketWatch.

Google: Google canceled I/O altogether and declined to comment on the show next year. The show will go on, however, for Google Cloud Next ‘20, with more than 200 sessions over nine weeks, from July 14 through Sept. 8, a Google Cloud spokesperson told MarketWatch.

Amazon: AWS Insights Online Conference is offering a free half-day “educational immersion” tutorial on media tech capabilities on May 28.

The evolution of developer conferences was inevitable in an era of lightning-fast streaming services, content on demand, and videoconferencing. A developer in say, Spain, can binge-watch cloud-computing solutions on one channel while another in Brazil views an archived keynote speech at roughly the same time. If it sounds suspiciously like a viewing experience on Netflix or Walt Disney Co.’s
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-1.74%

Disney+, that is the goal, she and others say.

Microsoft was already in the process of “re-imaging” how to connect more with developers to improve engagement, accessibility, resources, and content before COVID-19 — which accelerated its plan, Charlotte Yarkoni, corporate vice president of cloud and AI at Microsoft, told MarketWatch in a phone interview.

“People don’t like watching something that requires you to sit for four hours; they prefer content when they choose to watch regardless of time zones,” said Yarkoni, who called first-day demand and interest of Build “unprecedented.” She said interest in the weeks leading up to the two-day conference signaled that Build would experience a bump. Traffic for Microsoft Learn, a learning-platform for technical content usually used by developers, was up 272% in April, year-over-year, she said. What is more, Microsoft now has more than 72 million monthly active users across its technical documentation and learning sites.

Perhaps, another tech executive suggests, the preponderance of consumers using Zoom Video Communications Inc.
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-1.96%

has conditioned them to digest technical information online.

“Business-to-business conferences like ours are dependent on people meeting in-person,” Okta Inc.
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CEO Todd McKinnon told MarketWatch in a phone interview. But his perception changed after this year’s edition of Okta Live, an all-digital show in early April, drew record attendance. He’s now considering a permanent shift to a hybrid model of both in-person and digital attendees next year and beyond.

“We had tons of leads and off-the-charts engagement with an all-digital format,” McKinnon said after 20,000 attended, compared with 6,000 a year ago.

Nutanix Inc.’s
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Global .NEXT Digital Experience was to take place June 30-July 2 in Chicago. Now, it’s scheduled to be online in September.

“COVID-19 has forced Nutanix to think outside the box,” Nutanix Inc. Chief Marketing Officer Ben Gibson told MarketWatch in an email. “Consumers can expect the same great content from our traditional in-person events but on a schedule that best suits them — from the comfort of their home office.”

Before we write off the concept of the classic tech conference — even with the best of intentions and a treasure trove of content, there is no better way to network than in person, Collision’s Cosgrave points out. “Bigger conferences for meant for networking — dinners, cocktails, late-night meetings,” he said. “The flurry of networking is the utility of conferences. Speakers and panels are an excuse to go.”

“At the end of the day, we hope to be back in person in Toronto next year,” he said.



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