Morgan Stanley Raises Xilinx (XLNX) to 'Overweight' as Investors Shift Focus to Artificial Intelligence

Morgan Stanley upgraded Xilinx (NASDAQ: XLNX) from Equalweight to Overweight with a price target of $67.00 (from $46.00). Analyst Joseph Moore thinks machine learning could change the way investors look at the stock. He also anticipates revenue share gains. Moore explained, "A year ago, the focus of some Xilinx bulls was the high strategic value of the company's franchise in the context of a consolidating industry; the stock has modestly underperformed the substantial semiconductor rally since then, as M&A activity has focused on other subsectors. And yet, the fundamental outlook for the company has improved, we think, for 3 reasons: 1) as machine learning continues to evolve, we see the market for'inference' moving away from microprocessors and towards specialty solutions, including Xilinx FPGAs (as well as graphics and other specialty chips); 2) potential for share gains is improving as we have seen the company stretch its lead over Intel/Altera in the two most recent manufacturing nodes; and 3) we generally see the overall growth in FPGAs modestly improving, as base stations fade in importance and new technologies start to penetrate autos, factories and data centers."