The AI wars are starting to heat up.
until now, Nvidia (NASDAQ:NVDA) dominates the AI chip market with an estimated 98% share of the data center GPU market. but, intel (NASDAQ:INTC) The company announced the Gaudi 3 AI accelerator on Tuesday.
Intel says the new chip is well-positioned to take market share from Nvidia. Intel claims:
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Gaudi 3 delivers an average of 50% better inference and an average of 40% better power efficiency than the Nvidia H100.
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Gaudi 3 sells for a fraction of the price of H100.
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Intel said the new chips will go to manufacturers such as: Dell Technologies, hewlett packard enterprise, lenovoand super microcomputer.
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Also, Bharti Airtel, Bosch, IBMNielsen IQ.
Wall Street's reaction to the news was mostly lukewarm. Intel shares rose 1% on Tuesday on high volume, but fell 3% on Wednesday on concerns related to higher-than-expected inflation reports.
Intel's stock price soared into 2023 on hopes for a cyclical recovery in the semiconductor sector and excitement around AI, but the stock is flat in 2024 even as the rest of the chip sector continues to rise. , down 26% year-to-date. AI boom. Intel's shares plummeted in January following a disappointing fourth-quarter outlook, and just last week the company revealed it would post a $7 billion loss at its foundry division in 2023 after reorganizing its business segments. Stock prices plummeted. The company said it expects losses to widen this year before heading toward breakeven in its foundry business by 2027 and then returning to profitability.
Intel has a long history of underperforming its peers, and its stock price is still down from its peak during the dot-com boom. Over the past 10 years, Intel's stock price has increased by 38%, while Intel's stock price has increased by 176%. S&P500. But Gaudi 3 gives the company a chance at redemption.
What Gaudi 3 means for Intel
To understand the potential of data center GPUs, you only need to take a look at Nvidia's recent achievements. The leading AI chip company had data center revenue of $18.4 billion in the fourth quarter, an increase of 409% year over year. In contrast, Intel reported a 10% decline in data center revenue to $4 billion.
The good news for Intel is that it doesn't need to steal much market share from Nvidia to move the needle on AI chips. It would also make sense if he had $1 billion in revenue per quarter.
AI superchips such as Nvidia's H100 remain in significant short supply, and their components sell for high prices, so Intel is well-positioned to grab some market share. However, making a big impact on Nvidia's AI leadership is not so easy.
Nvidia strengthens strategy
Intel's press release and white paper on Gaudi 3 tout its performance against Nvidia's H100 accelerators, and its superior throughput and inference is due to its large amount of high-bandwidth memory (HBM), more efficient architecture, and HBM I think it's due to capacity.
The problem with this Intel comparison is that Nvidia's H100 is being replaced by the Blackwell platform announced at last month's developer conference. According to Nvidia, Blackwell is four times faster than the H100 and can run large language models with trillion parameters at up to 25 times less cost and energy demand than the H100.
Intel's Gaudi 3 may have closed the gap on the H100, but Nvidia is still winning the AI race with Blackwell scheduled to launch later this year.
Additionally, Nvidia's CUDA software platform includes developer tools and libraries to help build AI applications, giving challengers like Intel an opportunity to match CUDA's capabilities with open source platforms. , giving Nvidia an advantage.
Finally, Intel's cost advantage may not be as beneficial as you think. There are currently billions of dollars floating around in the generative AI market, with investors and companies looking to gain a sustainable advantage in what could become a multi-trillion dollar market. We are actively investing money at this stage.
While some customers may be more price sensitive than others, computing power, speed, and capacity are key factors that Nvidia, Intel, and other companies favor. Advanced Micro Devices We compete here, not on price.
It will be difficult for Intel to dethrone Nvidia. The AI chip leader has been investing in the technology for several years and has a complementary software platform in CUDA that will help it compete for market share, which currently accounts for the majority of its revenue. .
Intel may extract enough revenue to satisfy investors, but Gaudi 3 is unlikely to completely shift AI leadership from Nvidia to Intel. Nvidia investors have nothing to worry about at this stage.
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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has a position in and recommends Advanced Micro Devices and his Nvidia. The Motley Fool recommends Intel and International Business Machines and recommends the following options: A long January 2023 $57.50 call on Intel, a long January 2025 $45 call on Intel, and a short $47 May 2024 call on Intel. The Motley Fool has a disclosure policy.
Intel unveils new artificial intelligence chips — can it compete with Nvidia? Originally published by The Motley Fool