The Gaudi AI chips from Intel are lagging significantly behind Nvidia and AMD, and they won't meet the $500 million target.
Meanwhile, Nvidia is generating revenues in the tens of billions.
Nvidia has achieved great success thanks to the rise of artificial intelligence. Meanwhile, AMD's new AI chip has become the fastest-growing product in its history, already generating $1 billion in revenue per quarter and prompting AMD to transform itself into an AI-focused company. However, Intel, which had projected to earn between $1 billion and $2 billion from AI in 2024, now admits that it will not even meet its most conservative goal of $500 million for its Gaudi accelerator this year.
Pat Gelsinger, Intel's CEO, announced in the third-quarter 2024 earnings call that "we will not reach our $500 million revenue target for Gaudi in 2024." Despite launching the new version of its Gaudi 3 accelerator in the last quarter, Gelsinger acknowledged that "the overall adoption of Gaudi has been slower than we anticipated, as adoption rates were impacted by the transition from Gaudi 2 to Gaudi 3 and the ease of use of the software."
Despite this setback, Gelsinger expressed optimism about the available market and emphasized the need for higher total cost of ownership solutions based on open standards. The company continues to work on improving Gaudi's value proposition.
During the same call, Gelsinger also commented on the trend of spending in the AI chip industry, noting that so far, a significant portion of investment has been directed towards training AI models in the cloud. "Training creates the climate model; it does not utilize it," he stated, suggesting that integrating AI into all chips, and not just those designed for cloud use, could be more crucial in the long term.
Intel reported revenues of $13.3 billion in its quarterly results, representing a 6% decrease compared to the previous year, but an increase from the previous quarter. However, losses reached $16.6 billion, a figure that includes $18.5 billion in impairment adjustments and restructuring costs, corresponding to the company's decision to restructure for greater profitability in the future. In the last quarter, Intel announced a cost-cutting plan of $10 billion and over 15,000 layoffs. It is now also outlining some of the structural changes in the company, such as moving its edge computing business to the Client Computing Group, which generally handles its desktop and laptop chips, and integrating its software teams into the main business units. Gelsinger emphasized that Intel will focus on "fewer projects, with the highest priority on maximizing the value of our x86 franchise in client, edge, and data center markets."