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Chipmaker Intel Floats On Amazon, Google, Facebook Cloud Sales

No. 1 chipmaker Intel ’s ( INTC ) “winning lottery tickets” — Super 7 and Next 50 clients — will push continued double-digit sales for its Data Center Group, Jefferies analyst Mark Lipacis said Friday. But Intel’s “Cloud Day” event on Thursday didn’t lift Intel stock much on Friday; it closed up only a fraction, at 32.45. Intel stock is down 6% year to date, but it’s been on a three-week run since hitting a seven-month low of 28.22 on Feb. 11. On Thursday, at its Data Center Group (DCG) conference, Intel unveiled a new Xeon processor and a 3D Nand chip — the tech was developed with Micron Technology ( MU ) — and reiterated its commitment to help install “the next 10,000 clouds.” Lipacis wrote in a research report, “Intel’s new products and ongoing initiatives are making it easier to deploy clouds.” Easier cloud deployment should drive incremental demand for Intel’s high-margin microprocessors, he noted. Lipacis has a buy rating and 39 price target on Intel stock. Intel refers to its big DCG customers as the Super 7. They are  Alibaba ( BABA ), Amazon.com ( AMZN ), Baidu ( BIDU ), Facebook ( FB ), Alphabet ( GOOGL ), Microsoft ( MSFT ) and Tencent ( TCEHY ). Intel’s Super 7 sales rose at a 30% compound annual growth rate between 2012 and 2015, RBC Capital analyst Amit Daryanani wrote in a research report. Its Next 50 customer base grew at 40% compound annual growth rate (CAGR) over that span. Daryanani figures that the Super 7 comprised 75% of cloud sales in 2015, but Lipacis says that the Next 50 are growing twice as fast. Although PCs continue to represent 60% of Intel’s total sales, the chipmaker is making a smart grab for the cloud market, Daryanani wrote. “Intel is positioning itself at the center of cloud development,” Daryanani wrote, hiking his price target on Intel stock to 33 from 31 and maintaining his sector perform rating. DCG sales are slated for 20% growth through 2019, with a third stemming from the cloud business, Daryanani said. Assuming that DCG is 30% of sales in 2016, cloud revenue alone will account for 10% of Intel’s total revenue. On Thursday, Intel announced its builders program to accelerate adoption of network functions virtualization, and highlighted its nine-month-old Cloud for All initiative. Cloud for All aims to make it easier to deploy agile and scalable cloud platforms. It could be “a potentially positive driver for enterprise server spending (about 35% of DCG revenue),” Credit Suisse analyst John Pitzer wrote in a report. Pitzer rates Intel stock an outperform and has a 40 price target.

Google ‘Needs To Look Back To China’ To Boost Growth, Says Edison

Google, which withdrew its Internet search engine from China in 2010 after a disagreement over the country’s censorship rules, “needs to look back to China to bolster its flagging growth,” according to an industry note on Friday from Edison Investment Research analyst Richard Windsor. Edison’s research note comes as Google CEO Sundar Pichai has been on a visit to China involving Google’s AlphaGo artificial intelligence program , according to Chinese media reports. Lacking a search presence in China was initially not a problem because the search giant — now the largest unit within parent company Alphabet ( GOOGL ) — was experiencing quick growth in its core developed markets, said Windsor. With growth in those markets now slowing, “Google needs to look back to China” and that country’s expanding base of Internet users, said Windsor. However, convincing the Chinese government to let Google return will be a tall order, Windsor said, and the tech giant will likely “fail to get any real traction” now that local competitors have come on strong. Baidu ( BIDU ), which was Google’s chief search rival when the U.S. firm was in the Chinese market, is currently China’s largest search provider. “Even if the Chinese authorities let Google back in, they are very likely to place limitations upon Google, such that the home-grown crowd (Baidu, Tencent Holdings ( TCEHY ), Alibaba Group ( BABA ), Xiaomi and China Mobile ( CHL )) have the advantage,” Windsor said. “Secondly, the Chinese have been very busy developing their own ecosystems over the last six years or so, and this is no longer the virgin territory that it once was. Edison in fact estimates that 91% of all China ecosystem users are already using Baidu’s services, with 87% also playing games and chatting with Tencent,” he said. Google will have to fight for market share “even to get a toehold outside of Hong Kong (where Google is not blocked),” he said. “The net result is that the Chinese market will be a tough one for Google to crack, even with a level playing field,” Windsor said, adding that “Google is unlikely to get much more than the position in Hong Kong that it already has.” Still, Windsor said, “The good news for Google is that market expectations for its success in China are almost non-existent, and against that backdrop, the short-term outlook is reasonably rosy.” In 2010, Google said that it refused to self-censor content for Chinese services before closing its local search page and directing users to its website in Hong Kong. Other U.S.-based Internet firms, including professional networking leader LinkedIn ( LNKD ), operate in China and must censor their local content. Facebook ( FB ) and other Western social media, including Twitter ( TWTR ), are banned in China. Alphabet stock was up a fraction in afternoon trading in the stock market today , near 769, while Tencent stock was also up a fraction, near 21, and LinkedIn stock was up more than 1%, near 116. U.S.-listed Baidu stock was down a fraction, near 190, and Alibaba stock was also down a fraction, near 79.

Junior Could Get A College Scholarship For Playing Video Games

Parents worried that their kids are playing too many video games might need to rethink their perspective. At least one university plans to offer academic scholarships for e-athletes, people who play competitive video games. The University of California, Irvine, announced Wednesday that it will offer as many as 10 academic scholarships to students on its e-sports team. UC Irvine is launching a major e-sports initiative in the fall, the first of its kind at a public research university. The initiative includes a state-of-the-art arena equipped with high-end gaming PCs, a stage for “League of Legends” competitions and a live webcasting studio, which will be constructed at the UCI Student Center. “League of Legends” is a multiplayer online battle arena and real-time strategy video game produced by Riot Games, now a unit of Tencent Holdings ( TCEHY ). “ UCI eSports will be built on four pillars: competition, academics, entertainment and community,” Thomas Parham, vice chancellor for student affairs, said in a statement. “We hope to attract the best gamers from around the world, and our academic programs in computer gaming science, digital arts, computer science, engineering, anthropology, law, medicine, neuroscience and behavior create a strong foundation for research and inquiry related to gaming.” UCI already is home to a dedicated gaming community. College Magazine ranked UCI the No. 1 school for gamers in 2015. A recent survey of UCI students found that 72% identify as gamers, and 89% support the creation of an e-sports team, the school said. The computer game science major in the Donald Bren School of Information & Computer Sciences is the largest in the country. Los Angeles-based Riot Games has pledged its support for the e-sports initiative and will work with UCI to offer a premium “League of Legends” gaming experience. Custom gaming computer maker iBuyPower is equipping the 3,500-square-foot eSports arena with 80 of its high-end gaming PCs loaded with the most popular video game titles. E-sports is a hot growth area for video game companies. Major game publishers Activision Blizzard ( ATVI ), Electronic Arts ( EA ) and Take-Two Interactive Software ( TTWO ) have launched their own e-sports businesses. RELATED: Everybody Into The Pool! Take-Two Joins Esports Trend .