Nvidia (NASDAQ: NVDA) sells the most AI processors since its product has never been defeated. The business manufactures the most powerful microprocessor, allowing organizations train and infer AI algorithms. This helped Nvidia's earnings climb in the triple digits last year, and its share price rose more than 200%.
Rival Intel (NASDAQ: INTC) has struggled. Revenue has fallen due to lower PC demand. Additionally, Intel lagged in AI chip development. All this has lowered its 2020 share price by half. As Intel expands its AI portfolio, the tide may flip. This week, the business introduced Gaudi 3, an AI chip. Can this product boost Intel past Nvidia?
Performance by Gaudi 3 Here are some details about this new Intel chip. The business claims Gaudi 3 has 4x more AI processing and 1.5x more memory bandwidth than its predecessor. Importantly, Intel's new processor may compete Nvidia's top GPU, the H100. When utilized on Llama 2, the Gaudi 3 may train 50% faster than the H100.
Its inference throughput could exceed the H100 by 50% and is more power-efficient than Nvidia's. Intel gave the Gaudi 3 no pricing but said it outperformed the H100 "at a fraction of the cost." Companies that create platforms with these chips will get Gaudi 3 in the second quarter. Does this indicate Intel may overtake Nvidia? Not necessarily.
Remember that Gaudi 3 performance figures are "on average" utilizing certain LLMs and parameters. Product innovation is ongoing at Nvidia. The business introduced its new Blackwell architecture and would deploy its most powerful processors, the B100, later this year.
When it releases Blackwell, Nvidia may overtake Intel's Gaudi 3 even if it outperforms the H100. Gaudi 3 doesn't threaten Nvidia's product demand or long-term earnings.
An key Intel catalyst I think the product boosts Intel's earnings and share price. Demand for AI processors is significant and expected to expand when the AI market reaches $1 trillion by the end of the decade. It's unlikely one company will meet this demand.
Another thing to remember: Many organizations initiate AI programs based on cost, and some don't need the most powerful CPU. This allows a high-quality, affordable product with exceptional performance to stand out.
Intel may never surpass Nvidia as the world's largest AI chipmaker, but the Gaudi 3 could enhance revenues. Intel and other high-performance chipmakers will have additional opportunities as more organizations with diverse budgets and needs launch AI programs. Intel's low-cost performance may help it find a niche.
According to an Intel poll of 430 tech experts, only 10% of their companies had used generative AI models last year. This supports the assumption that AI is still young. If Gaudi 3 and Intel's other AI technologies sell well, Intel stock could outperform Nvidia. After falling 45% in three years, Intel is ready to comeback. Stock priced at 27x forward earnings projections is fair. In contrast to Nvidia, Intel and its shareholders benefit from the Gaudi 3 introduction.
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