Don't Count Intel Out in the AI Chip Race

Training AI models, like the large language model that powers ChatGPT, requires an incredible amount of computational horsepower. (NASDAQ: NVDA) dominates the market for AI training chips, and its latest H100 GPU is far and away the most performant option. The $40,000 chip, which must be linked together by the thousands to handle the most demanding workloads, are in high demand. Companies racing to train advanced AI models are snapping up NVIDIA's AI chips faster than the company can make them.

While Advanced Micro Devices (AMD) is planning to launch powerful AI chips later this year, the biggest threat to NVIDIA's dominance may actually be Intel (NASDAQ: INTC). Intel shelled out $2 billion back in 2019 to acquire Habana Labs, a developer of deep-learning accelerators. At the time, Intel predicted that the market for AI chips would exceed $25 billion by 2024. That prediction now looks quaint. More recent forecasts call for the AI chip market to top $300 billion by 2030, having surpassed Intel's target in 2022.

Habana's Gaudi2 AI chip, which launched in mid-2022, can't beat NVIDIA's H100 in terms of raw performance. But the chips do offer a solid value proposition, and the next-gen Gaudi3 chip may be able to go toe-to-toe with NVIDIA.

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Source Fool.com