Intel And AMD Are Going For A Bigger Role In The AI Era, But At A Gradual Pace

Nvidia Corporation NVDA undoubtedly had an early lead in the AI chip race, but its rivals are doing their best to challenge its dominance. After more than one failed attempt to discreetly enter the GPU arena, Intel Corporation INTC, the largest producer of PC and server CPUs, might be slow but seems to be playing the long game. Then there’s Advanced Micro Devices AMD who is already promising to challenge Nvidia with its new chips.

Intel is playing the long game.

According to PassMark Software, Intel still controls 64% of the x86 CPU market, but it has undoubtedly given a lot of market share to AMD over the years. AMD pulled ahead with cheaper and more advanced CPUs while Intel struggled to manufacture smaller, denser, and more power-efficient CPUs on its own, grappling with delays and shortages.

Shares tumbled upon its latest quarterly report as sales were short of estimates and Intel provided a weak forecast for the current quarter. But, Gaudi 3 release is expected to bring in more than $500 million in sales during the second half of the year. 

Intel is also setting itself apart from AMD and Nvidia with competitive pricing. It is also betting big on becoming a leading player in the foundry market by opening chip fabs throughout the U.S., which is a costly move as Intel does not expect to break even on this front before 2027.

But, when it comes to AI, Intel is playing the long game. Intel launched new AI accelerators this year. It  started expanding its manufacturing capacity as it aims to become the leading AI chip fabricator. Intel made crucial changes to its business model, with these efforts and investments promising to result in significant benefits over the next decade. It is undoubtedly going for a bigger piece of the AI pie with the launch of Gaudi 2 and Gaudi 3 accelerators, which are capable of running AI workloads for data centers.

AMD restructured its business to prioritize AI.

Launching its own AI GPUs and signing big fish clients like Microsoft Corporation MSFT and Meta Platforms META, AMD's second-largest market share in GPUs position it well for the AI race. Also, AMD is capable of filling in the supply gaps that Nvidia might not be able to meet.

But even AMD didn’t provide an impressive earnings report. For the first quarter of 2024, revenue rose only 2% YoY to slightly over $5 billion and while it recorded revenue revenue gains of over 80% in its data center and client segments, client and gaming segments declined 40%.

But in June, AMD introduced an upcoming series of chips. Expected to be available in 2025, the MI350 will be based on new chip architecture, promising to perform 35 times better in inference - the process of computing generative AI responses, compared to its currently available MI300 series. Additionally, AMD unveiled the MI400 series, which is scheduled for 2026 and will be based on an architecture called "Next".

But Nvidia is not staying still as also in June, it announced its next-generation AI chip platform called Rubin, it set to launch in 2026, and it would include GPUs, CPUs and networking chips. However, although the above companies are all at earlier stages of their AI journeys compared to Nvidia, this could also mean that they have more growth room to run. 

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