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Intel Corporation – Common is under Algo Engine buy conditions.

The launch of Intel’s Gaudi 3 AI accelerator and the reorganization of its foundry business are positive signs for future growth. During the first quarter, Intel’s revenues increased by 8.5% Y/Y to $12.7 billion.

The launch of Intel’s Gaudi® 3 AI accelerator in Q3, which appears to be more powerful than NVIDIA’s flagship H100 GPU, should also help the company improve the performance of its data center business, revenue to total $56 bln (+3% y/y) in 2024, and jump to $65.3 bln (+17% y/y) in 2025. Adjusted EBITDA is set to total $13.8 bln (+7% y/y) in 2024, and rocket to $20.3 bln (+47% y/y).

Intel’s revenue structure

Effective from 1Q 2024, the company modified its segment reporting, with revenue now coming from the following business units:

1. Intel Products

• Client Computing Group (CCG)
• Data Center and AI (DCAI)
• Network and Edge (NEX)

2. Intel Foundry

• Intel Foundry Services (IFS)

3. All other

• Altera
• Mobileye
• Other

Client Computing Group (CCG) – this segment generates about half of the company’s revenue. It supplies central processing units for desktop PCs and notebooks.

Data Center and AI (DCAI) – The key products in this segment are CPUs, GPUs and Gaudi AI accelerators.This segment has accounted for just under 30% of the company’s total revenue in recent years

Intel’s revenue structure: Intel Foundry

Intel Foundry – the segment that includes chip manufacturing for Intel’s own needs as well as for external customers. Intel entered the market of contract manufacturing of semiconductors in 2021 as Intel Foundry Service (IFS) to capitalize on the growing demand for foundry capacity. To provide transparency in the segment’s operations, the company in its reporting separates revenue generated from external customers and revenue from inter-segment sales within Intel. As of the end of 2023, revenue from external customers totaled $953 mln (+96% y/y), or 5% of total IFS revenue of $18.9 bln (-31% y/y).

Even though IFS revenue from external customers is relatively small, Intel has ambitious plans to expand the plants by investing its own funds and with the help of government subsidies (Under the CHIPS Act the US government has given Intel $8.5 bln in grants and the option to draw $11 bln in federal loans).