Microsoft's AI Ambitions Spell Trouble for Intel, Warns Analyst

Microsoft Corp.'s MSFT first-quarter results released on Tuesday underlined the company's early success with the adoption of artificial intelligence and its increasing accent on the technology.

This could prove to be a positive for the software giant but hurt one of the biggest chipmakers, an analyst said.

Microsoft cut server orders by 25-30% in 2023, with the bulk of these planned for the second half of the year, said Ming-Chi Kuo, an analyst at TF International Securities. Specifically, Intel Corp.'s INTC Sapphire Rapids server orders were cut by 50-70%, he noted.

The analyst also noted that not all of the servers Microsoft purchases for AI are Intel/x86 solutions. "The increasing share of AI in Microsoft's overall cloud spending is not good news for Intel," he said.

More details on the impact could be gleaned from Intel's quarterly results, which are due on Thursday.

Intel closed Tuesday’s session down 2.63% at $28.88, according to Benzinga Pro data.

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