Intel’s (INTC) New Offerings Aim to Accelerate AI Workloads

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Intel INTC recently rolled out its third generation Xeon Scalable processors and other product enhancements to its hardware and software AI portfolio. The aim is to enable customers to accelerate complex artificial intelligence (AI) and analytics workloads across data center, network and intelligent-edge environments.

Intel’s new 3rd Gen Xeon Scalable server processors are integrated with Deep Learning (DL) Boost capabilities and bfloat16 support, which drives AI training and inference performance.

The latest processors (dubbed “Cooper Lake”) are an improvement over Intel’s older 4- and 8-socket processor solutions.

Per CRN, the latest 4- and 8-socket processor solutions are based on 14-nanometer (nm) technology.

The semiconductor giant is expected to release 10 nm server processors for 1- and 2-socket processor solutions, which are widely in use, in later 2020.

Intel also unveiled Optane persistent memory 200 series, high-capacity 3D NAND SSDs — the Intel SSD D7-P5500 and P5600, AI-optimized Stratix 10 NX FPGAs — that significantly improve computing performance of AI workloads.

The improved inference features to deliver high performance and faster computing are expected to boost adoption. This, in turn, is anticipated to drive revenues in the coming quarters, and instill investor confidence in the stock that currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of Intel have gained 0.4% in the year-to-date period against the S&P 500 index’s decline of 3.3%.

Rapid Proliferation of AI in Hardware System Favors Prospects

With the latest announcement, Intel has upped its game in the AI trained inference server chip market.

Notably, the new “Deep Learning Boost” feature differentiates Intel’s processors compared to Advanced Micro Devices’ (AMD) similar offerings in the market.

Higher adoption of Intel’s AI focused offerings are anticipated to result in intelligent systems with higher accuracy and faster response times.

In fact, Facebook FB is implementing Intel’s latest third generation Xeon Scalable processors in its newest Open Compute Platform (OCP) servers. Moreover, notable cloud service providers or CSPs, including Alibaba BABA, Baidu BIDU and Tencent, have selected the new processors.

AI techniques like machine learning, DL and natural language processing (NLP) are rapidly changing business dynamics. AI essentially refers to the concept of machines and virtual programs that can replicate human mannerisms, such as speech recognition, visual processing and so on.

Rapid proliferation of AI into hardware system is becoming mainstream as secular growth in data calls for effective systems to support processing of workloads. Moreover, development of inference-enabled chips is anticipated to aid Intel boost its self-driving initiatives and register new deal wins from Mobileye.

Per IDC, 75% of commercial enterprise apps will utilize AI by 2021. Further, IDC projects that roughly a quarter of all data generated will be created in real time by 2025, with various internet of things (IoT) devices accounting for 95% of that volume growth.

Furthermore, per IDC data, worldwide spending on AI systems is envisioned to hit $97.9 billion at a CAGR of 28.4% between 2018 and 2023.

The prospects favor Intel’s increasing focus on delivering efficient solutions to intelligently handle workloads and improve performance.

Moreover, processors with in-built analytics, AI and deep learning are gaining prominence among enterprises with hyper-converged infrastructure.

Intel’s enhanced Select Solution for Genomics Analytics is being leveraged to find a vaccine for COVID-19. Meanwhile, the latest Intel Select Solution for VMware Horizon VDI on vSAN is being utilized to boost remote learning experience.

Intense Competition Remains a Concern

Nevertheless, the company has been facing stiff competition from AMD lately in the server processor market with ever increasing EPYC adoption. Notably, Intel’s chips utilize process technologies that are designed in-house.

Meanwhile, AMD is currently leveraging Taiwan Semiconductor Manufacturing Company’s 7 nm process technology, which is enabling it to deliver its advanced 7 nm chips faster to market.

Further, AMD aims to deliver “Zen 4” core architecture, which is “currently in design” utilizing advanced 5 nm process technology.

This is a major concern for Intel, which is yet to deliver 7 nm chips. Intense competition from AMD is likely to lead to pricing pressure and limit margin expansion at least in the near term.

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