Intel Could Still Be a Big Winner in the AI Server Boom

Demand for artificial intelligence (AI) infrastructure is off the charts

Around the world, companies and countries are heavily in AI data centers, fearful of being left behind

While the jury is still out on how long this frantic pace of AI data center build-outs will last, there are no signs of it slowing down anytime soon

The company's attempts to break into the AI accelerator market fell flat, and its server CPU has struggled recently as rival AMD stole market

Manufacturing delays in the past and a culture of complacency planted the seeds of the current crisis

Image source: Getty Images

Server sales are booming I wouldn't say that Intel has fully gotten its act together in the server CPU market, but the company has certainly made meaningful gress over the past few years

The server market is expected to grow rapidly over the next few years, and Intel is in a far better position today to reap the rewards

Global server sales topped $250 billion in 2024, according to IDC

Much of this growth will be driven by x86 servers with AI accelerators, although other are also set to expand

Although the bulk of spending related to AI servers goes toward GPUs, CPUs are still a critical component

The market for standard x86 servers will also expand, although not nearly as quickly

One blem was that Intel was stuck on its aging 14-nm cess nology due to delays with its 10-nm cess, and then it was stuck on its 10-nm cess

Granite Rapids moved to the Intel 3 cess, which is still behind TSMC, but not by nearly as much

Granite Rapids doubled the maximum core count from Emerald Rapids, and it brought significant imvements in performance and efficiency

Intel also launched Sierra Forest, which features large numbers of efficiency cores and is aimed at cloud workloads

Water Forest, the successor to Sierra Forest, will move to Intel's new 18A cess when it launches next year

At that point, the manufacturing gap with AMD should largely be closed

Arm is a real threat While Intel is well positioned to benefit from soaring server sales, servers built around Arm-based chips pose an additional threat

The x86 architecture is still expected to be dominant, but that dominance will certainly fade to a degree

Even with Arm expected to gain, the server market will be big enough for Intel to grow its server CPU

The company will need to fend off AMD and prevent any further market losses, and its new cess nologies will need to arrive on time

Intel may have missed out on the AI accelerator market, but with server sales set to boom through the rest of the decade, the company can still benefit from soaring AI demand

Timothy Green has positions in Intel

The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Taiwan Semiconductor Manufacturing

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