Intel Corp. has recently released a disappointing forecast for the first quarter, indicating a double-digit decline in its data-center business. This news comes as a blow to investors who had high hopes for the chip maker’s potential in the artificial intelligence (AI) market. Despite a surge in Intel’s stock following its third-quarter earnings, the company has yet to capitalize on the AI opportunity.
Nvidia Corp., on the other hand, has been thriving in the data-center business with its graphics unit processors (GPUs) designed for AI training and inference applications. In fact, Nvidia’s data-center business grew by nearly 280% in its fiscal third quarter, driven by the high demand for its GPUs in accelerating AI applications.
Intel is not giving up on the AI market just yet. The company has a $2 billion pipeline for its accelerator product line, code-named Gaudi, which is expected to compete with Nvidia. The next iteration, Gaudi 3, is set to launch sometime in 2024. Intel’s Chief Financial Officer, Dave Zinsner, expressed confidence in the company’s accelerator portfolio, stating that they expect it to gain traction as they move through 2024.
However, analysts have mixed opinions about Intel’s prospects in the AI market. Marbel Lopez, a principal analyst at Lopez Research, believes that Intel’s strength lies in inferencing and that it will take time for their AI story to unfold. On the other hand, Gene Munster, a managing partner at Deep Water Asset Management, is skeptical about Intel’s ability to benefit significantly from AI. He suggests that there are better investment opportunities in the AI silicon space.
Another concern raised by analysts is the slow pace of Intel’s product releases and the bottleneck caused by software development. Lucas Keh, an analyst at Third Bridge, noted that investors were disappointed with the slower-than-expected product ramp. He also questioned whether cloud players would be interested in Nvidia alternatives outside of their own custom silicon developments.
Despite the setback in the data-center business, Intel sees an opportunity in the PC space. The company believes that AI-ready PCs with Intel chips, capable of computing AI queries on the device instead of relying on the cloud, will gain traction starting in the second quarter and continuing through the second half of 2024.
This disappointing forecast serves as a reminder that not every company has concrete numbers yet in the AI market. While there is still hope surrounding AI, investors need to be cautious and not get ahead of themselves when it comes to Intel’s AI story.
In conclusion, Intel’s Q1 forecast includes a decline in its data-center business, highlighting the company’s struggle to capitalize on the AI opportunity. Nvidia continues to dominate the data-center market with its GPUs designed for AI applications. Despite Intel’s plans for its accelerator product line, analysts have mixed opinions about its potential success in the AI market. The slow pace of product releases and software development are also concerns raised by experts. However, Intel sees potential in the PC space with AI-ready PCs. This forecast serves as a reminder that concrete numbers are still lacking in the AI market, and investors should approach with caution.
