Intel Stock Rises as Company Unveils Next-Gen AI Data Center Chips

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

Intel shares surged ahead of Tuesday’s opening bell following the unveiling of its latest processors at the Computex trade fair in Taipei. The chipmaker hopes that its new Xeon 6 data center chips will help it gain market share in the rapidly growing artificial intelligence (AI) data center market, where competition is fierce.

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Key Takeaways

  • Intel introduced next-generation Xeon 6 AI data center chips, including a more powerful processor for larger AI infrastructure requirements and an efficiency model to replace older chips.
  • The company’s Gaudi 3 accelerator kit, housing eight Xeon 6 chips, is priced at around $125,000, significantly cheaper than Nvidia’s comparable HGX server system.
  • Investors should watch the $24.73 price level closely, as a failure to hold could lead to a retest of key multi-year support at $19.50.

New Processor Lineup Unveiled

Intel’s latest Xeon 6 data center chips aim to address the increasing demand for AI processing power. The more powerful processor is designed to handle larger workloads, while the efficiency model offers improved performance with reduced power consumption. This move is part of Intel’s strategy to regain market share lost to competitors in recent years.

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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.
Source: Annabelle Chih / Bloomberg / Getty Images

Intel CEO Pat Gelsinger emphasized the efficiency gains of the new chips, stating that they require fewer server racks and are well-suited for various applications such as website hosting, media processing, and database calculations. The company plans to roll out additional iterations of the Xeon 6 chips in 2025 to further expand its product lineup.

Competitive Pricing Strategy

One of Intel’s key selling points is the competitive pricing of its Gaudi 3 accelerator kit, which houses eight Xeon 6 chips. Priced at around $125,000, this kit significantly undercuts Nvidia’s HGX server system, which can cost upwards of $300,000. By offering a more affordable solution for AI data center processing, Intel aims to attract customers and regain lost market share.

Despite facing challenges in manufacturing and competition from rivals like Nvidia and AMD, Intel remains optimistic about the potential of its new processor lineup. Analysts project modest sales growth for Intel this year, while competitors are expected to see more substantial increases.

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Monitoring Price Levels

Investors should pay close attention to Intel’s stock price as it approaches key support levels. A failure to hold above $24.73 could signal further downside potential, potentially leading to a retest of major multi-year support at $19.50. Monitoring price action at these critical levels can provide valuable insights into the stock’s future trajectory.

As of early trading on Tuesday, Intel shares were up 1.2% at $30.65, reflecting positive investor sentiment following the chipmaker’s product announcements.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice. The author does not own any securities mentioned in this article.

Original article: Intel Stock in Focus After Revealing Next-Gen AI Data Center Chips

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