Intel falls behind in AI race, Nvidia and AMD surge

Once a leader in the computer chip industry, Intel, has faced significant challenges adapting to the AI era. Seven years ago, Intel had an opportunity to invest in OpenAI, a then-emerging non-profit focused on generative AI. Discussions between the two companies explored various investment options, including a $1 billion stake and hardware manufacturing deals, but Intel ultimately decided against it.

CEO Bob Swan doubted the near-term market viability of generative AI models, leading to the decision not to invest. OpenAI sought the investment to reduce reliance on Nvidia chips and develop its own infrastructure, but Intel’s data centre unit was unwilling to produce hardware at cost. Since then, OpenAI has launched ChatGPT and achieved a valuation of around $80 billion, marking a significant missed opportunity for Intel.

The decision was part of a series of strategic missteps that saw Intel fall behind in the AI chip market. The company’s stock recently plummeted, marking its worst trading day since 1974 and valuing it at under $100 billion for the first time in three decades. In contrast, rivals like Nvidia and AMD have surged ahead, capturing significant market share with AI-optimised GPU technology.

Despite recent efforts to catch up, such as developing the Gaudi AI chip and acquiring startups like Nervana Systems and Habana Labs, Intel still lags behind competitors. The company’s previous focus on CPUs over GPUs, which are better suited for AI tasks, has left it struggling to compete in the rapidly growing AI market.