Forecast for 2021 for such technology companies as: Intel, AMD, Arm, Microsoft and others. Changes that public companies can expect next year.
This is the second part of an article that provides TheStreet analyst Eric Jones’s predictions for tech stocks in 2021. The first part is available here.
9. Slowdown in the growth of video game manufacturers. Demand for new game consoles and TV will decrease.
Quarantine measures imposed by national governments have forced people to seek entertainment online. Producers of video games and online gaming services were among the largest beneficiaries of this lockdown.
Although the long-term prospects for the gaming industry remain strong, some of the audience will decrease their activity in online services after schools, universities and company offices open. Consumers will return to outdoor activities and offline entertainment.
Trends in sales of new game consoles, TVs and some home appliances also seem to be unstable – strong demand for these products, observed in recent months, may significantly decrease.
Reduced spending on consumer equipment will be reflected in the shares of manufacturers of chips that make up this equipment, especially in the second half of 2021.
10. A Year of Change for Intel
Intel (INTC) announced in July that it will rely more on outsourcing its server and PC processors in the coming years, presumably partnering with TSMC.
The company promised to release more details on where future products will be produced during its January profit and loss statement.
Due to delays in its own production and increased competition from AMD (AMD) and Arm technologies, Intel lost some market share and was forced to sell some of its divisions. Intel shares are down 17.5% this year.
11. Growth of AMD Server Processor Business
TheStreet analyst sees three real prerequisites at once for increasing sales of AMD chips for PCs and servers in 2021. First, the forthcoming third-generation AMD Epyc (Milan) server processors will deliver significant performance gains for single threaded workloads. Such processors for many enterprises make up the majority of their server computing needs.
Secondly, AMD will continue to benefit from the production problems of its main competitor – Intel, due to which some enterprises will finally reconsider their choice of supplier.
Third, the growth of cloud infrastructure could push companies to try out less expensive AMD processors.
12. Microsoft Leadership Growth
2020 was another year of growth for Microsoft Cloud Services (MSFT) – with a sharp increase in the number of Teams users, the launch of the Microsoft Cloud for Healthcare cloud healthcare platform and even the announcement of the development of its own microprocessors for servers used in data centers.
Among other things, Microsoft acquired two companies working in the 5G network solutions: Affirmed Networks and Metaswitch Networks.
In September, the tech giant announced it was launching its own online gaming service, xCloud, with a fairly solid library of video games for $ 15 a month, but the service so far only works on Android devices. However, in Spring 2021, xCloud will start supporting Windows PCs and iOS devices, with Xbox support coming later.
The xCloud game library is also promising to grow after Microsoft completes its acquisition of video game maker Bethesda Softworks.
13. Amazon Prime Will Increase Annual Fees
Analyst Eric Jones sees a number of reasons Amazon (AMZN) is likely to increase its annual Prime subscription fee by $ 10- $ 20 in 2021: macro conditions are likely to improve next year; both e-commerce and Prime content service usage rates appear to have skyrocketed in 2020; Amazon has spent a fortune since the last price hike, investing billions of dollars to expand its one-day delivery service, as well as grocery and pharmacy delivery, expanding its Prime Video content library, and more.
14. Antitrust investigations give no cause for concern
Some of the serious tech antitrust cases currently pending – like the Justice Department v Google (GOOG) lawsuit over its search methods, or the FTC v Facebook (FB) lawsuit over Instagram acquisitions and WhatsApp – will likely take years. Any initial unfavorable decision is almost guaranteed to be on appeal. Some of the cases that could be resolved earlier, such as the Epic Games v Apple (AAPL) claim over the company’s App Store policies, are cases that may not cause significant financial harm to the defendant, or the defendant has a good chance of winning in these cases. …
As a result, the impact of tech antitrust investigations in 2021 could be mirrored by internal decision making by tech giants – for example, some M&A deals could be restricted or some policy changes made to reassure consumers and regulators.
15. More active share buybacks
Tighter antitrust controls on mergers and acquisitions, as well as high levels of free cash flow (FCF) from large US tech companies, give them incentives to buy back their shares more aggressively next year.
16. Tensions between Washington and Beijing will continue
Wall Street analysts give different forecasts for the growth of the stock market under the presidency of Joe Biden, however, most experts agree that trade tensions with Beijing may decrease in general, but remain a “hot topic” in the field of technology.
The former US vice president is likely to continue Trump’s tough policies against IP theft practices and unfair competition between Chinese and American companies. American companies will continue to relocate their facilities to other Asian countries to reduce their dependence on Chinese manufacturing. China, for its part, will seek to ditch American silicon and software.