June 11, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of fabless semiconductor specialist Mellanox Technologies (Nasdaq: MLNX ) climbed as high as 10.7% on Monday after its adapter silicon was chosen by Intel (Nasdaq: INTC ) for use in their I/O Expansion modules and half-width server boards.
So what: While financial terms of the deal weren't disclosed, being selected by the world's largest chip maker naturally reinforces the optimism over Mellanox's revenue growth going forward. In fact, the stock is hitting an all-time high today on the news, roughly doubling over the past six months alone.
Now what: Given the recent rollout of Intel's Romley platform -- requiring faster interconnection speeds -- I wouldn't expect the demand for Mellanox's products to wane anytime soon. "Intel's deployment of Mellanox InfiniBand silicon is a testament to the high performance and efficiency of our solutions," said David Barzilai, vice president of marketing at Mellanox. "Server and storage OEMs looking to roll out faster and more powerful systems will maximize their products' potential with Mellanox InfiniBand solutions." Of course, when you consider Mellanox's 100-plus P/E, much of that potential might already be baked into the red-hot stock price.
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