Intel posted a better-than-expected set of Q4 2024 results. While revenue declined 7% year-over-year to $14.26 billion, beating estimates, adjusted net earnings came in at $0.13 per share. Intel has been contending with increasing competition in the server and PC space from AMD, which has impacted pricing.
Intel is aiming to increase its presence in the AI space with its Gaudi 2 and upcoming Gaudi 3 accelerators, which are designed for AI workloads in data centers. The company is looking to compete on price, offering systems with eight Gaudi 2 accelerators for around $65,000 - about one-third the price of comparable platforms. Although Intel faces considerable challenges, given Nvidia's early lead and software ecosystem for AI development, the market could seek alternatives to Nvidia chips given their high pricing.
Below are key drivers of Intel's value that present opportunities for upside or downside to the current Trefis price estimate for Intel:
For additional details, select a driver above or select a division from the interactive Trefis split for Intel at the top of the page.
Intel is best known for manufacturing and selling microprocessors, which serve as the central processing unit (CPU) in servers, desktops, and notebooks. As the most critical component driving a computer's power and performance, microprocessors are central to Intel's business. The company has also been ramping up investments in its foundry operations, aiming to produce chips for other semiconductor companies.
Microprocessors and chipsets used in servers, desktops, and notebooks are the major sources of revenue for the company.
Intel is also betting heavily on becoming a foundry player, producing chips for other semiconductor companies and taking on the likes of TSMC and Samsung Electronics. While the business has posted heavy losses in recent years, it could be on the cusp of a turnaround. The Intel 3 process node has been in mass production for several months now and is used to make the Xeon 6 data center chips. Processors made using the latest Intel 18A process are being sampled with laptop manufacturers. Intel has talked up the 18A process in the past, indicating that it could help the company reclaim “process leadership”.
AMD's Ryzen processors are in high demand of late. Ryzen CPUs have been able to deliver competitive power at a relatively lower cost. As such, AMD has gained some market share from Intel over the past few quarters. AMD is currently working on 7nm chips, which will roll out around the same time as Intel's 10 nm chips. AMD could gain further share in the coming quarters over Intel with its new chips, which it plans to launch for all major products - Ryzen, Radeon, and EPYC processors.
Beyond Ryzen, AMD's growth in the server market is more worrying for Intel. AMD's EPYC processors have been gaining a share amid strong performance at a lower price point.
Server virtualization is essentially server consolidation that enables running multiple applications on a single server instead of on multiple servers. Server virtualization is driving a shift in the mix towards higher-end servers, which require multi-core processor servers that tend to be more complex and more expensive than traditional single-core processors.
While PC shipments have declined drastically in the last few years, mobile shipments (particularly smartphones and tablets) have grown at a robust rate. Though the growth rate has slowed as developed markets near saturation, mobile shipments continue to expand at a fast pace.
New Windows versions are ARM-compatible, which has opened up the market to ARM-based processor manufacturers. This market has traditionally been dominated by x86 processor architecture. This will challenge Intel's dominance, which could result in a loss of some market share in the future from increasing competition.