Given Intel Corp.’s delayed pursuit of AI opportunities, the company’s data center division is poised for another significant decline, with a projected double-digit decrease following a disappointing first-quarter forecast.
Intel’s stock, trading under the symbol INTC, has surged approximately 50% since its third-quarter earnings report, partly fueled by its potential in supplying AI chips. In November, an industry expert highlighted a potential “under-the-radar AI opportunity” within Intel. However, the company witnessed an 11% drop in its shares recently due to lower-than-expected first-quarter estimates.
On the other hand, Nvidia Corp., identified by the symbol NVDA, has been strengthening its data center segment with specialized graphics processing units (GPUs) tailored for AI training and inference tasks. The demand for Nvidia’s GPUs to accelerate AI software has propelled its data center business to grow by nearly 280% in the fiscal third quarter.
Despite Intel’s challenges, Chief Financial Officer Dave Zinsner disclosed that the company’s forthcoming Gaudi product line is positioned to compete with Nvidia, backed by a substantial $2 billion investment. The upcoming Gaudi 3, slated for a 2024 release, aims to challenge Nvidia’s dominance, according to Zinsner, although CEO Pat Gelsinger refrained from providing specific timelines.
While Intel has witnessed shifts in market share between central processing units (CPUs) and accelerators in recent quarters, Zinsner anticipates a return to historical growth rates for CPU compute cores by 2024. Moreover, Intel’s discrete accelerator portfolio, with a pipeline exceeding $2 billion, is expected to gain momentum in the coming years.
Maribel Lopez, a prominent researcher at Lopez Research, believes that the second quarter of the year will mark a pivotal moment in Intel’s AI journey, emphasizing the company’s strength in inference capabilities as a key differentiator in the market.
However, not all industry experts share the same optimism. Gene Munster, managing partner at Deep Water Asset Management, expressed skepticism regarding Intel’s AI prospects, suggesting that the company may not capitalize on the AI boom as expected, citing alternative strategies for leveraging AI effectively.
Lucas Keh, a scientist at Third Bridge, raised concerns about Intel’s product release pace, attributing the delays to technological bottlenecks and disappointing investors with slower-than-expected product launches. Keh also questioned the market appetite for Nvidia’s offerings beyond its custom silicon advancements.
In addition to its data center focus, Intel is eyeing opportunities in the PC market, anticipating the rollout of AI-capable PCs equipped with Intel processors for localized AI processing by the second quarter of 2024.
The key takeaway from Intel’s AI journey underscores the importance of managing expectations and recognizing the evolving landscape of AI technologies across industries. While challenges persist, the demand for AI remains robust, signaling continued opportunities for innovation and growth.
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