Breaking Analysis with Dave Vellante

Exactly one week after Pat Gelsinger’s announcement of his plans to reinvent Intel, Arm announced version 9 of its architecture and laid out its vision for the next decade. We believe this vision is very strong as it combines an end-to-end capability, from edge to cloud to the datacenter to the home and everything in between. Arm’s aspirations are ambitious and powerful leveraging its business model, ecosystem and software compatibility with previous generations.

Intel’s big announcement this week underscores the threat that the United States faces from China. The U.S. needs to lead in semiconductor design and manufacturing; and that lead is slipping because Intel has been fumbling the ball over the past several years. A mere two months into the job, new CEO Pat Gelsinger wasted no time in setting a new course for perhaps the most strategically important American technology company. We believe that Gelsinger has only shown us part of his plan. This is the beginning of a long and complex journey. Despite Gelisnger’s clear vision, deep understanding of technology and execution ethos, in order to regain its number one position, Intel will need help from partners, competitors and very importantly, the U.S. government. 

In 2020 it was good to be in tech and even better to be in the cloud as organizations had to rely on remote cloud services to keep things running. We believe tech spending will increase 7-8% in 2021 but we don’t expect investments in cloud computing to sharply attenuate as workers head back to the office. This is not a zero sum game and we believe that pent up demand in on-prem data centers will complement those areas of high growth that we saw last year, namely cloud, AI, security, data and automation. #BreakingAnalysis #theCUBE #ETR

On February 19th of this year, Barron’s dropped an article declaring Oracle a cloud giant and explained why the stock was a buy. Investors took notice and the stock ran up 18% over the next 9 trading days and peaked on March 9th, the day before the company announced its latest earnings. The company beat consensus earnings on both top line and EPS last quarter. But Investors didn’t like Oracle’s tepid guidance and the stock pulled back..but is still well above its pre-Barron’s article price. 

When a piece of digital art sells for $69.3M, more than has ever been paid for works by Guaguin or Salvador Dali, making its creator the third most expensive living artist in the world, one can’t help but take notice and ask: “What is going on?” The latest craze around NFTs may feel a bit bubblicious, but it’s yet another sign that the digital age is now fully upon us.

Microsoft CEO Satya Nadella sees a different future for cloud computing over the coming decade. In his Microsoft Ignite keynote, he laid out the five attributes that will define the cloud in the next ten years. His vision is a cloud platform that is decentralized, ubiquitous, intelligent, sensing and trusted. One that actually tantalizes the senses and levels the playing field between consumers and creators by placing tools in the hands of more people around the world.

SaaS companies have been some of the strongest performers in this COVID era. They finally took a bit of a breather this month but they remain generally well-positioned for the next several years with their predictable models and cloud platforms. Meanwhile, the demise of on-prem legacy players from COVID shock seems to have been overstated, in part because of the return of the laptop, and, in the case of Oracle, what some see as a cloud play 

UiPath’s recent $750M raise at a $35B valuation underscores investor enthusiasm for robotic process automation. And why not? The pandemic has fueled a surge in automation as organizations re-tool their operations and prepare for a post-COVID environment. But reasonable people are asking - is this market getting overheated.

Top security pros indicate that the Solar Winds hack, on top of the pandemic, have further heightened a change in how they think about security. Not only must CISOs secure an increasingly distributed workforce and network infrastructure, but they now must be wary of software code coming from reputable vendors, including the very patches designed to protect them against cyber attacks. Background provided by https://www.storyblocks.com/

There are four A players in the IaaS / PaaS hyperscale cloud services space. AWS, Azure, Alibaba and Alphabet. In our view, these four have the resources, momentum and stamina to outperform all others...indefinitely. Combined, we believe these companies will generate more than $115B in 2021 IaaS and Paas revenue. That’s a substantial chunk of market opportunity that is growing in the mid 30% range this year.