The Consumer Electronic Show (CES) 2019 kicks off which week, marking what many experts believe will be a pivotal year for emerging technology companies and the tech enthusiasts they are hoping to attract.
But the CES is not just a platform for new companies to peddle their wares. It is also an event for established companies to proclaim their relevance. The annual technology trade show, which runs in Las Vegas from Tuesday, Jan. 8 through Friday, Jan. 11, will feature keynotes from some of the world’s most-influential leaders and its fiercest competitors. Unlike previous years, however, my attention during the CES will be locked on the chipmakers Intel (INTC), Nvidia (NVDA) and Advanced Micro Devices (AMD).
Over the past couple of years, they’ve benefited from they hype driven by what they announced and display at the annual event. Some, in fact, in an effort to get ahead of all of the news, have already started generating excitement via timely announcements. But beyond the hype, I’m interested to see what these three chip giants reveal terms of their technology. I’m also looking to get a hint of their business strategies for 2019 and formulate what I believe are realistic expectations.
A Look Inside Intel
The first company I will be intrigued by is Intel, which is still operating with an interim CEO. The chip giant has had a tumultuous 2018 — one that investors hope it can quickly reverse. Not only has the company lost its lead in process technology, Intel relinquished its longstanding title as the world’s largest chipmaker by revenue to Samsung. Will the CES be where Intel’s reversal begins?
Intel is focusing on ways to better harness the capability of the cloud and the ubiquity of the Internet of Things (IoT) to create amazing experiences for consumers. The new CEO, when she/he is installed, must convince investors the company can quickly shift from business from the PC market, which still accounts for a sizable portion of its revenue. While replacing Qualcomm (QCOM) chips in Apple’s (AAPL) iPhone has been a positive for Intel, it will need to show its own path independent of Apple, particularly amid a period of slowing mobile growth.
Can Nvidia regain its swagger?
The CES will also draw my attention to the ongoing battle between Nvidia and AMD. Not only do these two compete in the realm of GPUs (graphics processing units), they also fight for dominance in cryptocurrency mining. In the final quarter of 2018, Nvidia, which has been a high-flier for three years, took a beating. Investors were disappointed by its guidance, which suggests that its rapid growth and its constant beat-and-raise quarters were coming to an end.
Combined with the fizzling market for cryptocurrency mining, there’s also the fear Nvidia might be dealing with weaker pricing due to excess inventory. The company’s management believes it will take a few quarters to fix its inventory challenges. If or when the inventory issue is resolved, does that mean the company will regain its status as a high-flier? Investors certainly hope so. But the fact that its stock price has fallen 50% from $292 to $141 suggest the market isn’t betting on it. Can the CES revive those expectations for Nvidia? We won’t know for several quarters, but Nvidia is not alone in its predicament.
AMD setup to dominate in 2019?
Company CEO Dr. Lisa Su is expected to offer a keynote to discuss, among other things, “the future of gaming and virtual entertainment.” The keynote will highlight technologies to boost the future of gaming, entertainment and virtual reality. But AMD, which enjoyed a comeback year in 2018, has its own set of challenges immediate with which it must deal, including working to overcome challenges such as the waning GPU demand used in cryptocurrency mining, which has resulted in excess inventory.
It’s anyone’s guess when prices will revert back to normal levels. Having already unveiled the second-generation of its Ryzen laptops processors, AMD his not wasting time, touting other areas of the business. The chipmaker has also unveiled the seventh-generation A-series processors for Chromebooks. And at the CES it will showcase the Ryzen 3000-series — new mobile processors that are built on the company’s 12nm manufacturing process.
So while AMD’s top and bottom lines are expected to drop a bit in the fourth quarter, due mainly to the weakness in crypto-mining, its market share growth for CPUs has been steadily rising to the point where it has surpassed Intel. And this to its new chip architecture, which will be revealed at the CES, AMD looks poised to dominate the chip sector in 2019.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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