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Intel Stock: Data Center Chips On Track, Big AI Opportunity

Intel (INTC) has reassured Wall Street it is on track with its data center processor roadmap. The chipmaker also says it has a play in the burgeoning artificial-intelligence market. Intel stock surged on the news.


At an investor event Wednesday, Intel updated analysts on its data center processor lineup. Executives said Intel is slightly ahead of schedule, by about three months, with its next-generation Xeon server chip, code-named Granite Rapids.

The 7-nanometer-scale chip will launch in the third quarter of 2024. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.

“The slight pull-in of Granite should fuel a bit more confidence in the product roadmap,” UBS analyst Timothy Arcuri said in a note to clients. He rates Intel stock as neutral with a price target of 29.

On the stock market today, Intel stock climbed 1.8% to close at 32.09. On Wednesday, after the product briefing, Intel stock jumped 7.6% to close at 31.52.

Intel Chip Progress ‘Encouraging’

Intel also detailed its follow-on chip, code-named Clearwater Forest. The 5-nanometer-scale chip will succeed Granite Rapids in 2025, Intel said.

Intel is currently ramping production of its Sapphire Rapids server chips. It also is sampling its Emerald Rapids and Sierra Forest chips, which will launch in fourth-quarter 2023 and first-half 2024, respectively.

“This was a positive event with roadmap progress clearly encouraging — though plenty of execution risk remains,” Evercore ISI analyst C.J. Muse said in a note to clients. He rates Intel stock as in-line, or neutral, with a price target of 30.

At the event, Intel said it intends to play in the artificial-intelligence market with its AI accelerators and field-programmable gate array, or FPGA, semiconductors.

Intel now estimates that its total addressable market opportunity in data center and AI silicon will exceed $110 billion by 2027. That’s up from $40 billion in 2022.

Intel faces stiff competition in the AI semiconductor market from Advanced Micro Devices (AMD), Nvidia (NVDA) and others.

Analysts Neutral To Negative On Intel Stock

Barclays analyst Blayne Curtis said Intel is “on the outside looking in on AI.” Its central processing units are likely to lose business to graphics processors from AMD and Nvidia in the AI market, he said in a note to clients. He rates Intel stock as equal weight, or neutral, with a price target of 27.

Rosenblatt Securities analyst Hans Mosesmann kept his sell rating on Intel stock after the event.

“We see Intel 1-2 years behind AMD in CPU (central processing unit) architecture/process, and at least as much in GPUs (graphics processing units),” Mosesmann said in a note to clients.

Intel stock has a subpar IBD Composite Rating of 47 out of 99, according to IBD Stock Checkup.

IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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