Intel’s Forecast Is Negatively Impacted By AI Competition

(CTN News) – Despite a downbeat forecast on Friday, Intel shares were down more than 12% on Friday after the company warned that the boom in artificial intelligence was diverting enterprise spending away from its traditional data center chips.

As a result of Intel’s low production of advanced artificial intelligence (AI) chips and components, the stock price has plummeted around 30% so far this year as it trails rival companies such as Nvidia in this field.

Data from LSEG shows that Intel forecast revenue for the second quarter of $12.5 billion to $13.5 billion, compared to the average estimate of $13.57 billion by analysts.

It is clear that the company is profoundly broken, and it will take years for its (currently exhaustive) efforts to bear fruit, despite the fact that we believe they are doing everything they can to repair things,” Bernstein analysts said in an analysis.

A $100 billion investment spree is being planned by across four US states to build and expand factories throughout the country. This year, the company also unveiled a new chip based on artificial intelligence (AI) to keep up with the competition.

During Thursday’s close, the company’s market value was at $149.3 billion, so Friday’s drop would be enough to wipe out nearly $19 billion from its market value.

Intel’s central processing units,

Which have for a long time been the mainstay chip powering the data centers of the world, have been hurt by businesses spending more on advanced and faster AI server chips, hurting demand for central processing units.

Goldman Sachs analysts said they were encouraged by the introduction of Intel’s Gaudi 3 AI chip, but they expressed concern that it is continuing to cede wallet share to companies like Nvidia and Arm within the entire data center computing market.

Still, Intel believes that a fresh upgrade cycle for personal computers around a new version of Microsoft’s Windows operating system will help PC sales in the second half of the year as a result of a fresh upgrade cycle. It is possible that this could translate into a higher demand for the chips it uses in those devices as well.

There was a clear contrast between Nvidia’s earnings and those of Microsoft and Alphabet, which are Nvidia’s clients and also design their own chips for their data centers in-house.

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