Intel’s future, IBM’s new acquisition and Rubrik goes public – SiliconANGLE

It was a rough week for Intel Corp., as its stock slid after the company reported disappointing first-quarter financial results and a weak outlook.

Providing the bigger picture around that news was one focus for theCUBE Research industry analysts John Furrier (pictured, left) and Dave Vellante (right) on the latest episode of the CUBE podcast.

Intel Chief Executive Office Pat Gelsinger acknowledged that market demand was somewhat weaker than expected, adding the company is forecasting a drop in gross margins in Q2, even though the company is expecting rising revenues. Meanwhile, Intel Chief Financial Officer David Zinsner said significant startup costs are at play, but the company expects margin expansion later in the year.

“But that’s dependent on revenue growth … you have an x86 market that basically is under fire,” Vellante said. “The TAM is not expanding. You’ve got AI chips, squeezing them. You’ve got Arm squeezing them. You’ve got their CPU market share getting squeezed. You’ve got the foundry business challenges.”

That suggests a hockey-stick forecast, which is hoping for revenue growth in the second half and into 2025, according to Vellante. But all this does is put more risk into Intel, he added.

“I do think they’re going to have a little uptick from the PC cycle, and I think there’s going to be a lot of, ‘See, we told you so, Intel’s back,’” Vellante said. “Investors are going to pour back in. I think it’s going to be a dead cat bounce.”

The structural changes going on in the industry are fundamentally challenging Intel’s business models, according to Vellante. They will really expose themselves in the latter part of this decade.

“My prediction is it’s going to get really ugly,” he said. “As I’ve said before, I hope I’m wrong. But I can see it. I’ve seen this before.”

Thoughts on IBM acquiring HashiCorp

This week, IBM Corp. announced it had entered into a definitive agreement to acquire infrastructure management provider HashiCorp Inc. for a total of $6.4 billion. It’s a good deal for IBM, according to Furrier.

“I think this will be as good if not better than the Red Hat deal. Mainly because … it’s a big piece of the puzzle. It’s going to give IBM and Red Hat specifically a major element of the stack with Terraform and with Vault, which has secret data stuff in there,” Furrier said. “They’ve done amazing. Their product will fit. IBM will take the thousands of unmonetized customers and make it great.”

HashiCorp’s momentum had been waning, and the company doesn’t have an international presence, according to Vellante. ETR data also shows that the overlap in VMware and Azure accounts is quite high, he noted.

“It’s like 20% of those accounts have HashiCorp. The flip side, like HashiCorp accounts, there’s like 70 or 80% overlap with those two clouds,” Vellante said. “That cross-cloud connection, remember, we had David McJannet in at Supercloud 1, and I think that’s legit. But the other thing, John, is they had a really good partnership with VMware, as did IBM. It’s going to be interesting to see what happens to that.”

Rubrik goes public to start next chapter

Data security software provider Rubrik Inc. saw its stock jump 16% after going public this week, raising $752 million. It came after Rubrik CEO Bipul Sinha pivoted the company to security, something not everyone was convinced of at the time, according to Vellante.

“When Bipul pivoted the company to security, I was like, ‘Oh, come on. Really?’ And then you saw last year at RSA, they had a big, big presence at RSA,” Vellante said. “I was like, OK, maybe there’s something to this.”

In looking at ETR data, one of the questions was, what else can you be responsible for other than security. Sure enough, backup and recovery and data protection are right in there, Vellante noted.

“It’s become a fundamental part of a security posture. And Bipul made the right call,” he said. “Now, their financials, they’re losing a lot of money. They’ve got to tighten that up when they start reporting on a regular basis. But, hey, he got to the public market, good for them.”

It’s always good to see entrepreneurial success, according to Furrier. Bipul and the team at Rubrik have been closely tracked by the team at theCUBE.

“The grind that goes into building a company, all the hassles, all the ups and downs, the rollercoaster, now they get to rewrite their story, because now they’re successful,” Furrier said. “These guys worked hard, and it was competitive. Great to see them hit the ‘going public’ again, the beginning of a new chapter.”

Watch the full podcast below to find out why these industry pros were mentioned:

Joe Biden, 46th president of the United States
Donald Trump, 45th president of the United States
Rob Strechay, managing director and lead analyst at theCUBE Research
Mitchell Hashimoto, founder of HashiCorp
Dave McJannet, CEO of HashiCorp
Arvind Krishna, chairman and CEO of IBM
Tim Crawford, CIO and strategic advisor of AVOA
Pat Gelsinger, CEO of Intel
David Zinsner, EVP and CFO of Intel
Dallin Grimm, writer at Tom’s Hardware
Morris Chang, American-Taiwanese businessman
Satya Nadella, chairman and CEO of Microsoft
Kevin Durant, American basketball power forward
Danny Allan, CTO of Snyk
Peter McKay, CEO of Snyk
Erik Bradley, chief strategist and research director at ETR
Frank Slootman, chairman of the board of directors at Snowflake
Bipul Sinha, co-founder, chairman and CEO of Rubrik
Sanjay Poonen, president and CEO of Cohesity
Larry Ellison, chairman of the board and CTO of Oracle
Michael Dell, chairman and CEO of Dell Technologies
Charles Fitzgerald, consultative strategist and investor
Jeremy Burton, CEO of Observe

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Photo: SiliconANGLE