Analyst Srini Pajjuri from Raymond James has reiterated his Outperform rating for Intel stock (INTC), highlighting the potential benefits the company may reap from the growing interest in artificial intelligence (AI). Pajjuri believes that Intel’s upcoming processors designed for AI applications position the company well for success in this field. He maintains a $42 price target on the chip maker.
Intel’s Promising Outlook
Despite the fact that Intel may not receive immediate recognition for its AI efforts, Pajjuri asserts that the company is strongly positioned in this space. He points to several factors contributing to Intel’s positive outlook, including moderating share losses, improved execution of its roadmap, progress in their foundry operations, and long-term opportunities in AI.
Pajjuri expects Intel to highlight its future AI chips prominently at the upcoming developer conference. In particular, he highlights Intel’s Gaudi AI accelerators as potential competitors to Nvidia’s leading products in smaller-size AI workloads. Pajjuri predicts that Gaudi could make a significant revenue contribution by 2024.
While some analysts express concerns about Intel facing short-term pressures as customers prioritize AI-related chips over traditional CPU processors, Pajjuri downplays this risk. He states that the impact of GPU cannibalization on Intel has been manageable thus far and believes that AI proliferation will ultimately benefit most data center chips, including CPUs.
Over the past 12 months, Intel shares have soared by an impressive 32%.