Alibaba Group Holding Ltd (BABA)

[DiscoverGold]

AI Stock And Alibaba IoT Partner With 217% Growth Enters Buy Zone
By: Investor's Business Daily | March 22, 2018

Leading semiconductor and AI stock STMicroelectronics (STM) is testing a new buy zone, just days after announcing it completed validation of its inertial and pressure sensors for AliOS Things, a new Internet of Things (IoT)-related operating system from Chinese internet giant Alibaba (BABA). But with the general market rattled by expected intellectual property tariffs on China by President Trump, both STMicroelectronics and Alibaba are down Thursday.

As a core element of Alibaba's IoT ecosystem, AliOS Things enables users to create complete nodes and gateway solutions and reduce the amount of time it takes to get new offerings to market. Sensors produced by STMicroelectronics that have passed Alibaba's validation have been integrated into a sensor-based component of AliOS called uData.

Alibaba and STMicroelectronics are also cooperating in other ways on the development of IoT systems that aim to improve end-user experiences.

Leading AI Stock

Based in Switzerland, STMicrolectronics is a global semiconductor industry leader whose products "power the electronics at the heart of everyday life."

From self-driving car technology and factory automation to health care and IoT connectivity, STMicroelectronics's artificial intelligence (AI) and machine learning technology is used in a wide range of applications.

Like Intel (INTC), Amazon (AMZN), Nvidia (NVDA) and Alibaba, STMicroelectronics has emerged as a leading AI stock, helping drive so-called AI at the edge, which is driving, among other things, the revolution in smart cars, smart homes and other applications and devices located at the edge of a network rather than in a centralized data center.

Explosive Earnings Growth

Over the last three quarters, STMicroelectronics has generated average EPS growth of 217%. Analysts are looking for a 116% increase in Q1 earnings when STMicroelectronics reports at the end of next month.

Quarterly revenue gains have accelerated over the last two reports, rising from 19% to 33% in Q4.

STMicroelectronics' 97 Composite Rating ties it with IBD Big Cap 20 stock Microchip Technology (MCHP) for the No. 1 ranking among semiconductor manufacturers. Cypress Semiconductor (CY), Intel and Analog Devices (ADI) round out the top 5 leaders in the industry group.

Breakout Chip Stocks ... With Flaws

Intel has already broken out, and after a choppy, post-breakout period, has now climbed 8% above its original buy point. The chip giant is so far holding up relatively well in Thursday's market sell-off.

Like Intel, Cypress Semiconductor has shown seesaw action since clearing breaking out in January, falling as much as 17% below the initial 17.52 entry. After falling over 3% Thursday, Cypress is now just 1% above that price.

But STMicroelectronics, Analog Devices and Microchip Technology have been trading in or near a buy zone, but the current market uptrend showing "uptrend under pressure," it's a risky time to buy any stock.

STMicroelectronics undercut the low in its prior base back in February to reset its base count. On Wednesday, the stock cleared the 24.78 buy point in its new, first-stage cup with handle. Volume was rising, but still 21% below average — well below the 40% or higher spike you look for on the day of a breakout. The relative strength line has been rising, but remains below new high ground.

Heading into afternoon trading Thursday, STMicroelectronics was down over 5%, as the Nasdaq, Dow Jones and S&P 500 all headed lower. See if STMicroelectronics can hold support at its 50-day line.

Like STMicroelectronics, Analog Devices reset its base count in February, then went on to form a cup with handle. It briefly cleared the 95.02 buy point, but has slipped back below it. The stock is now testing support at its 50-day moving average.

To further confirm that stocks of a feather do indeed flock together, Microchip Technology also reset its base count recently, then broke out of a new, first-stage chart pattern before pulling back around 2% below the buy point.

Meanwhile, STMicroelectronics' IoT and AI partner Alibaba continues to work on a later-stage base showing a 206.30 buy point. Alibaba is also down sharply Thursday, and is struggling to close the day above its 50-day line.

https://www.investors.com/research/ibd-stock-analysis/ai-stock-stmicroelectronics-semiconductors-alibaba-iot-alios/?src=A00220&yptr=yahoo

• DiscoverGold