Intel’s AI Chip Deals Fail to Deliver After One Year

ntel (INTC.O) recently reported optimistic revenue projections, but the company is facing challenges with its AI chip sales. The tech giant has revised its earlier forecast, stating that it will not achieve its goal of selling over $500 million worth of Gaudi accelerator chips designed to enhance AI application performance. CEO Pat Gelsinger attributed this shortfall to issues with related software and a transition from the chip’s second to third generation.

Despite an overall revenue forecast that boosted Intel shares by 5% in early trading, the company’s stock remains over 50% down for the year, highlighting its struggle to capitalize on the AI boom and complete its turnaround. Gelsinger initially anticipated significant business for Intel’s AI chips after the successful launch of ChatGPT, which relied on Nvidia GPUs. However, after assessing the market dynamics, it became clear that Intel’s sales projections were overly ambitious, especially considering its supply chain limitations with TSMC.

By January, Intel had indicated potential for $2 billion in AI-chip deals, but as of the latest reports, Gelsinger has scrapped the previous revenue targets for 2024, indicating a more cautious outlook. Analysts have raised concerns regarding Intel’s strategic direction in AI, questioning whether the company’s CPUs can remain competitive in a market increasingly dominated by Nvidia.

Overall, while Intel reported third-quarter revenues of $13.3 billion—surpassing expectations—losses attributed to impairment and restructuring charges amounted to $16.6 billion. The company’s future hinges on its ability to effectively execute its AI strategy and maintain customer loyalty amid fierce competition
NEWS DESK
PRESS UPDATE