Opinion: Intel stock decline shows Wall Street has yet to learn its lesson about the AI ​​hype

Read also: Intel's earnings expectations came in very short and the stock is in decline

The data center is where Nvidia Corp. NVDA,
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Cleaned using graphics unit processors (GPUs) designed for AI training and inference applications. Nvidia's data center business grew nearly 280% in its fiscal third quarter, as it continues to see continued demand for its graphics processing units to accelerate AI applications.

The company has a $2 billion pipeline for its accelerator product line, codenamed Gaudi, a chip that is expected to compete with Nvidia, Intel Chief Financial Officer Dave Zinsner told analysts Thursday. The next edition, Gaudi 3, is expected to launch sometime in 2024, but CEO Pat Gelsinger did not provide any details about the timing.

“Although the data center has seen some shift in wallet share between CPU and accelerators over the past few quarters, we expect growth in CPU compute cores to return to more normal historical rates and our discrete accelerator portfolio, with over $2 billion is in the pipeline, “to gain traction as we move through 2024,” Zinsner said Thursday.

Marbel Lopez, principal analyst at Lopez Research, said she believes Intel's AI story won't begin until the third quarter. “Heuristics is Intel's strength, and it's where it can win,” she said. “It's just a long-term game.”

Some analysts are more skeptical. Jane Munster, Managing Partner at Deep Water Asset Management He told CNBC after the Intel call that he doesn't think Intel will get a big boost from AI Which he hopes for. “There are better ways to leverage the AI ​​opportunity in silicon,” he said.

Lucas Kee, an analyst at Third Bridge, said in a note to clients that he believes new Intel products are coming out at a slower pace than expected, and that software is one of the bottlenecks. He said investors were disappointed because production slowed more slowly than expected.

“It also raises a new question about where exactly cloud players' appetite for Nvidia alternatives lies outside of their own custom silicon developments,” Keh said.

In addition to the data center, Intel also has an opportunity in the PC space, where it believes new AI-ready PCs with Intel chips that can compute AI queries on-device rather than in the cloud will begin to take off starting next year. The second quarter and continues until the second half of 2024.

But the lesson here is that investors got a little ahead of themselves on Intel's AI story, which is a reminder that there's still a lot of hope surrounding AI — but not every company has hard numbers yet.

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