Check out the latest Xilinx earnings call transcript.

Xilinx (XLNX) defied the broader semiconductor market weakness in 2018 thanks to a string of solid product development moves and impressive contract wins, which have allowed it to keep rival Intel at bay in the field-programmable gate array (FPGA) market. Not surprisingly, the chipmaker has caught a lot of attention of late, and analysts expect it to sustain its terrific run in 2019.

Higher data center spending and the beginning of 5G deployments are expected to drive Xilinx's growth in 2019 and beyond. The company will have to pass its first major test on Jan. 23, when it is expected to release its fiscal third-quarter results, as that will be critical in setting the tone for the remainder of the year.

Let's see what's expected of Xilinx and why it is all set to begin the year with a bang.

Hand drawing ascending arrow.

Image Source: Getty Images.

A beat is in the cards

Analysts expect Xilinx's revenue to jump 22% year over year to $770 million, while earnings are expected to shoot up from $0.05 a share in the prior-year period to $0.85. The top-line expectation is in line with the company's own guidance. Similarly, Xilinx should easily meet the earnings estimates, as it had reported earnings of $0.87 per share on revenue of $746 million during the second quarter.

Investors should remember that Xilinx had raised its full-year guidance in October last year thanks to a spate of new deals. Demand for the company's data-center-specific chips has been increasing at a terrific pace due to demand from major cloud service providers. AWS, for instance, has doubled the availability of its Xilinx-powered FPGA-as-a-service (FaaS) cloud server to eight regions.

Similarly, Chinese cloud giant Alibaba is now offering FaaS commercially along with Huawei, while Microsoft has been reportedly looking to deploy Xilinx's chips across half of its Azure cloud servers. Apart from these, the company has already started witnessing the benefits of early 5G deployments and 4G upgrades.

So it won't be surprising to see Xilinx beating estimates and issuing strong guidance yet again.

New developments will power long-term growth

Xilinx is taking advantage of several opportunities that are in their early phases of growth. The chipmaker was recently selected by German auto components supplier ZF to power its latest self-driving platform. This is the first time that automakers will have an option to use Xilinx's FPGAs to power Level 4 self-driving cars instead of a graphics card from NVIDIA, opening an entirely new opportunity for the company's programmable chips.

Xilinx has supplied chips to more than 160 million automotive systems so far. Around half of them are being used to power driver-assistance systems, so the move into self-driving systems is the next logical step for Xilinx. The company can win big with this move, as the market for advanced driver-assistance systems (ADAS) is growing at an annual pace of 19%, according to Grand View Research.

Meanwhile, Xilinx is taking a crack at the solid-state drive (SSD) market as well. That's another huge opportunity, as SSDs are gaining traction in data centers thanks to their faster performance, the potential for larger storage capacity, and smaller but flexible form factors. The SSD market is expected to hit $60.7 billion in revenue by 2023 as compared to $26.4 billion in 2017.

Xilinx can take a bite out of this market thanks to its partnership with Samsung, which has integrated the former's FPGA accelerator to bring higher processing power and lower power consumption to SSDs. Analysts believe that Xilinx's chips will boost the performance of Samsung's SmartSSDs by 2.8 to 3.3 times, which is why they can be deployed in data centers to tackle artificial intelligence workloads.

What's more, Samsung isn't the only one integrating Xilinx's chips into SSDs. The likes of NGD Systems, Smart IOPS, and ScaleFlux have already tapped Xilinx's FPGAs to bring such "computational SSDs" to the market that are capable of tackling workloads at the storage level itself, allowing data center operators to lower operating costs and boost performance.

A promising bet on emerging tech trends

The above catalysts are just some of the reasons why Xilinx has been able to beat the broader semiconductor market weakness. The company's strategy of going after markets with solid growth potential has paid off handsomely so far, and there's no reason why it shouldn't work going forward. As such, Xilinx looks poised to deliver another beat and raise this time, which should ensure that its rally continues.