Trip Chowdhry: VMWare Is A $45 Stock

Chowdhry explained in his research note that VMware's business is being "squeezed" on two different fronts. The first, from SuperClouds, like Amazon.com, Inc. AMZN's AWS segment and Microsoft Corporation MSFT's Azure.

On the other end of the spectrum, VMware faces heavy competition from Red Hat Inc RHT. In fact, the analyst stated that the parallel universe to SuperClouds is being built on Red Hat's stack and not on VMware's stack.

Chowdhry further suggested that VMware is a "declining asset business" and has "zero chance" of getting out of its predicament.

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He also added that the rise of micro-services and server-less computing is a further negative to VMware.

Finally, VMware's contracts with the federal government is "weakening" and the segment, which represents 12 percent of its overall business is losing market share to Amazon's AWS, Microsoft's Azure and Red Hat.

"VMW results may be window-dressed to make DELL + EMC acquisition appear good, but the market is moving away from VMW, and sadly will not be coming back," the analyst wrote.

Bottom line, fundamental investors should "continue to lighten up their positions" in VMware's stock.

At time of writing, VMware was up 0.87 percent on the day, trading at $62.61.

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