· Inphi has been a strong outlier with beat-and-raise quarters, fueled by its strong physical layer product offerings for telecom and data centers.
· 2020 is going to be a big product year for Inphi, with commercial opportunities for its Canopus 7nm 400G ZR DSP, 200G/400G PAM4, and M200 DSP.
· The acquisition of eSilicon should enhance the company’s long-term internal design capabilities and competitiveness.
· Inphi is well positionned in telecom and data center and the growth opportunities for its physical layer products, but the valuation is definitely growth-driven.
This has been an amazing year for Inphi (IPHI), as the market has woken up to not only the company’s strength in physical layer technologies for the data center and telecom markets but also its ability to execute on those technical capabilities. Looking into 2020, Inphi has the chance to leverage 400G ZR, 200G/400G PAM4, and its M200 coherent DSP into even larger addressable markets, keeping the company on a trajectory to a served addressable market of $2 billion in 2022 against a likely 2019 revenue figure around $365 million.
Inphi’s qualities are certainly no longer overlooked, with the shares up over 130%. While I realize that growth/momentum investors will not be discouraged by valuation, it’s harder and harder to work the numbers to support such a robust valuation.
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