Intel gave its new AI chips top billing during the company's developer conference Tuesday, but the chip maker's financial chief appeared to steal the show.
Intel Corp. gave its new AI chips top billing during the company’s developer conference Tuesday, but the chip maker’s financial chief appeared to steal the show later in the day as he tempered expectations for margin improvement.
While Intel went on to report margins of 53.1% for the first quarter of 2022, that was the last time margins came close to the forecasted range. Since then, the closest margins have come to the target were the 44.8% margins that Intel posted in the second quarter of 2022, while the lowest they have dropped was to 38.4% in the most recent first quarter. Then, Intel posted its largest quarterly loss on record.
The Bernstein analyst said his Street consensus showed expectations of a 550-basis-point improvement in gross margins for calendar 2024, suggesting that the company’s forecast for $4 billion to $5 billion in annual savings on the cost of goods sold “might be a 2025 story at best.”Rasgon titled his note to clients: “Some bark, some bite…” — a reference to the essence of the presentation but also his dog Chip’s barking interruption during the webcast.
“We see x86 headwinds in PC/server as ARM penetration and accelerator adoption grow,” Schafer wrote in a note dated late Tuesday. Arm, which returned to the public markets last week, uses a different architecture than Intel’s x86, one that favors low power consumption over the high performance that generates a lot of heat and uses a lot of electricity.
Nvidia unveiled its DGX GH200 Grace Hopper superchip in early August with an expected release date in the second quarter of 2024. Schafer noted Intel execs see 80% of the DGX target market as using eight or fewer GPUs, and that the company is targeting that market with its Gaudi accelerators for AI inference and training large-language models. Despite Intel’s efforts, however, Schafer said “Nvidia’s dominance in training LLMs is unlikely to be disrupted.
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