Intel Stock in Focus After Company Reveals Next-Gen AI Data Center Chips

Key Takeaways Intel revealed its latest processors, which the chipmaker hopes will enable it to grab market share from rivals in the booming AI data center market.

Intel's next-generation Xeon 6 AI data center chips come in two types: a more powerful processor to handle the workload of larger AI infrastructure requirements, and an efficiency model, which the company has positioned as a replacement for earlier-generation chips.

The company's Gaudi 3 accelerator kit, which houses eight Xeon 6 chips, will sell for around $125,000, making it considerably cheaper than Nvidia’s comparable HGX server system.

A failure to hold the late February low at $24.73 could see Intel shares revisit key multi-year support around $19.50.

Intel (INTC) revealed its latest processors on Tuesday, as the chipmaker aims to grab market share from rivals in the booming artificial intelligence (AI) data center market.

Intel unveiled the Xeon 6 data center chips at the Computex trade fair in Taipei alongside other leading chipmakers. The next-generation chips come in two types: a more powerful processor to handle the workload of larger AI infrastructure requirements, and an efficiency model, which the company has positioned as a replacement for earlier-generation chips.

Intel said the efficiency chip will require about 67% fewer server racks, making it suitable for hosting websites, running media, and handling database calculations. "Simply put, performance up, power down," Chief Executive Officer Pat Gelsinger said during a presentation at the event, according to a report from Reuters.

Pat Gelsinger, chief executive officer of Intel Corp., holds an artificial intelligence processor as he speaks during the Computex conference in Taipei, Taiwan, on June 4, 2024. Annabelle Chih / Bloomberg / Getty Images

Higher-Powered Chip Available in Third Quarter

Intel said the efficiency Xeon chip will be available for delivery on Tuesday, but noted that the higher-powered processor won’t be shipped until the third quarter of this year. It also intends to launch additional iterations of the chips in 2025.

The chipmaker also said that its Gaudi 3 accelerator kit, which houses eight Xeon 6 chips, will sell for around $125,000, making it considerably cheaper than Nvidia’s (NVDA) comparable HGX server system with eight H100 AI chips that can cost more than $300,000, according to custom server vendor Thinkmate, Reuters reported.

Intel, which makes its own processors, will be hoping its competitively priced data canter chips can help it reclaim market share that's been lost to competitors over the past year due to several manufacturing challenges. Analysts expect the chipmaker's sales to grow at just 2.8% this year. By contrast, Wall Street sees rivals Nvidia and Advanced Micro Devices (AMD) growing annual sales by 97.5% and 12.6%, respectively.

Monitor Price at This Key Level Amid Further Downside

Zooming out to the weekly chart, Intel shares broke down below the lower trendline of an ascending channel and the 50-day moving average in early April, with declines accelerating into early May. More recently, the price has consolidated within a pennant, a chart pattern that indicates a continuation of the current longer-term downtrend.

If the stock moves lower from these levels, investors should monitor how the price responds to its late February low at $24.73. A failure from buyers to defend this level could see the downtrend revisit key multi-year support around $19.50, which currently sits 36% below Monday’s $30.29 closing price.

Intel shares gained ground in pre-market trading but were down 0.3% at $30.20 about an hour after the opening bell Tuesday.

UPDATE: This article has has been updated with recent share price information.

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