Intel announces new AI chips to rival Nvidia

on Jun 4, 2024
  • Intel detailed the Xeon 6 AI chip at Computex on Tuesday.
  • A brief overview of what its new processor has to offer.
  • Intel stock is down nearly 40% versus its year-to-date high.

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Intel Corp (NASDAQ: INTC) is in focus this morning after announcing new chips to expand its footprint in the AI data centre market.

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Intel unveiled Xeon 6 AI chip at Computex

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The multinational revealed “Xeon 6” at an international information technology trade show in Taipei on Tuesday.

Intel’s next-gen processor is available in two variants: a more powerful one for the more demanding AI tasks and an efficiency one built primarily as an alternative to its previous generation chip.

Pat Gelsinger – the chief executive of $INTC described the new efficiency processor as “processor up, power down” at Computex on Tuesday. The chip, he claimed, requires up to 67% fewer server racks.  

The news arrives more than a month after Intel Corp reported $12.72 billion in revenue for its first financial quarter which was shy of Street estimates. Its guidance for the current quarter failed to meet expectations as well.

Wall Street currently has a consensus “hold” rating on Intel stock that’s down nearly 40% at writing versus its year-to-date high in late January.

Intel’s Gaudi 3 has price advantage over Nvidia’s HGX

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Intel will take until the third quarter of 2024 to start shipping the power variant of its new processors. The efficiency Xeon chip, however, will begin deliveries on Tuesday.

The tech titan also plans on introducing new iterations of its AI chips in 2025.

CEO Gelsinger also confirmed at Computex today that $INTC’s Gaudi 3 accelerator kit will go for about $125,000 HGX server system of rival Nvidia Corp at a sharply higher $300,000.

Note that Gaudi 3 accelerator kit comprises of eight Xeon 6 chips while $NVDA’s HGX houses eight H100 chips. The price advantage, Intel hopes, will help it regain share in AI data centres that it’s lost to rivals in recent years.

At writing, analysts forecast a mere 2.8% growth in the Nasdaq listed firm’s chip sales this year versus 12.6% for Advanced Micro Devices and a whopping 97.5% for Nvidia Corp.

The massive expected growth in $NVDA saw analysts at Mizuho raise their price target on the semiconductor behemoth this morning to $1,275 that translates to an over 10% upside from here. Nvidia stock will begin trading on a post-split basis on June 10th.

A key technical level to watch following the split will be $95, as per our market analyst Ritesh A.

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