Intel’s recent revenue projections showed an optimistic outlook for 2024, yet the tech giant’s AI-focused Gaudi accelerator chips have struggled to meet initial sales targets. Initially forecasted at $500 million in sales for 2024, the company has since scaled back expectations due to software compatibility issues and a shift from Gaudi’s second to third generation.
CEO Pat Gelsinger, who remains positive about Intel’s broader AI market potential, noted these obstacles as Intel works to build a competitive edge in the rapidly expanding AI sector. Following the success of Nvidia-powered AI applications like ChatGPT, Intel aimed to rival Nvidia’s graphics processing units (GPUs) with its Gaudi chips. Although Intel announced a $1 billion “pipeline of opportunities” in 2023, supply shortages from key manufacturer TSMC constrained their ability to meet this target.
Despite challenges in Gaudi adoption, Intel has made notable achievements, reporting a third-quarter revenue of $13.3 billion, exceeding analyst predictions. However, stock prices remain low as Intel strives to capture a piece of the AI hardware market, currently led by Nvidia. Analysts, including Vivek Arya from Bank of America, have raised concerns about Intel’s AI strategy, especially as the company’s central processing units (CPUs) become more commoditized.
Intel is optimistic about the Gaudi chip’s third generation, which has shown promising benchmarks. Gelsinger remains focused on long-term growth, although some analysts question if Intel has the necessary operational control to achieve its ambitious goals. Chief investment officer Michael Ashley Schulman from Running Point Capital expressed doubts about Intel’s progress, citing concerns over Gelsinger’s approach to managing the company’s AI strategy.
As Intel navigates challenges in the AI chip market, the company’s ability to compete with giants like Nvidia remains uncertain. However, Intel’s commitment to innovation and aggressive growth targets suggest the tech company is prepared to invest in its long-term future in AI and data processing.
