Amazon pursues its own networking chip amid frosty Broadcom relationship

Frosty relationship Amazon and Broadcom

  • Amazon .com (AMZN) is developing a chip to power the hardware switches used in networking, The Information reports - a move that could reduce its reliance on Broadcom (AVGO), with which it has a cool relationship.
  • For years Amazon has designed its own semiconductors to speed performance in its Amazon Web Services/AI operations.
  • Now, tapping its Annapurna Labs unit, Amazon is making a bigger step toward taking control over a key part of its technologies. A hardware switch chip would be part of a broader effort to make the performance of its cloud servers indistinguishable from those in private data centers.
  • AWS also plans to design an array of networking hardware components and software to cut latency and move data quickly, according to the report.
  • The company is initially expected to use switches powered by its chip to run the internal network, though it might not be surprising if services based off the switches were offered to AWS customers.
  • For years Amazon has bought Broadcom chips in bulk, helping it reduce its reliance on more expensive networking silicon from the likes of Cisco Systems (CSCO) and Juniper Networks (JNPR).
  • But that relationship is frosty, according to the report, in part because Broadcom CEO Hock Tan is known for hardball negotiation tactics (including surprise price hikes, pressing for exclusivity deals and dramatically extending lead times if customers push back).

    Over the current book year the total revenue from the company in Seattle will be 474.09 billion USD (consensus estimates). This is quite more than 2020's revenue of 386.06 billion USD.

    Historical revenues and results Amazon plus estimates 2020

    koersgrafieken

    The analysts expect for 2021 a net profit of 24.77 billion USD. For this year the majority of the analysts, consulted by press agency Thomson Reuters, expects a profit per share of 47.75 USD. Based on this the price/earnings-ratio is a huge 63.99.

    Analysts don't expect the company to pay a dividend. The average dividend yield of the general retailers is a poor 0.92 percent.

    Newest target prices around 4053 USD

    The most recent recommendations for the general retailer are from Barclays , Goldman Sachs and Jefferies & Co..

    Amazon 's market capitalization is around 1521.53 billion USD. The Amazon stock was the past 12 months quite unstable. Since last March the stock is even 57 percent higher. This year the stock price moved between 1889 and 3552 dollar.

    Historical stock prices Amazon

    fundamental research amazon

    At 17.03 the stock trades 1.65 percent higher at 3055.29 USD.

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