Intel, the iconic chipmaker, is facing a major setback in its AI ambitions. The company’s Gaudi AI accelerator program, designed to power the rapidly growing AI market, has fallen short of revenue targets, raising concerns about Intel’s ability to keep pace with rivals like Nvidia.
During Intel’s third-quarter earnings call, CEO Pat Gelsinger revealed that Gaudi would generate less than $500 million in revenue for 2024, a far cry from the initial target of $1 billion to $2 billion. The shortfall is attributed to a transition from the second to third generation of the Gaudi product line and challenges with software ease of use, resulting in slower adoption than anticipated.
This news comes at a critical juncture for Intel, which has been struggling to maintain its market dominance in the face of fierce competition. The company’s stock has plummeted by nearly 55% in 2024, making it a tempting target for acquisitions. Qualcomm, a key competitor, is reportedly considering a takeover bid, highlighting the pressure Intel is facing.
While Intel led the data center market in 2022, its dominance has been eroded by Nvidia’s meteoric rise in the AI chip market. Nvidia’s dominance in AI chips has propelled its stock valuation to stratospheric heights, making it the most valuable company in the world, surpassing even Apple. Nvidia’s current market capitalization stands at a staggering $3.256 trillion, dwarfing Intel’s $92.73 billion and AMD’s $233.8 billion.
Despite the setback, Gelsinger remains optimistic about the long-term potential of Gaudi, emphasizing its cost-effectiveness and open standards. Intel’s Q3 2024 revenue reached $13.28 billion, exceeding analyst expectations.
The news of Gaudi’s performance sent Intel’s shares soaring 6.8% in premarket trading on Friday, reaching $22.98. However, the question remains: can Intel turn the tide and reclaim its position as a leader in the burgeoning AI chip market? Only time will tell if Gaudi can deliver on its promise and help Intel regain its lost momentum in the face of intense competition.
