How Much Can The Data Center Group Add To Intel’s Revenues In The Next 5 Years?

-6.02%
Downside
43.77
Market
41.13
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We expect Intel’s Data Center Group revenues to increase by approximately $4 billion over the next five years. At present, the segment accounts for about 31% of the company’s overall revenues and we expect this figure to increase to 34% by 2021. This is essentially because we expect global server processor shipments to continue increasing during this period. Some of the factors that will drive growth in this market include: 1) the adoption of Big Data analytics; 2) high growth in data intensive computing; 3) the adoption of Cloud Computing and the server buid-out it requires; and, 4) the growth in High Performance Computing. Intel is likely to be a direct beneficiary of these growth trends because it commands more than 90% of this market. However, we expect the company’s market share to decline slightly going ahead due to the entry of ARM-based players in the server market. Further, Intel might lose some of its market share to AMD, as the latter is trying to regain its share in the segment by designing ARM based processors in addition to its x86 processors for multiple markets, starting with cloud and data center servers. Nevertheless, we believe that Intel’s loss due to market share declines will be largely offset by the increase in the global server processor shipments. In the table below, we show how we expect Intel’s revenues from this segment to grow in the next 5 years:

CAGR_server

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