Intel gets surprise data-center tailwind as it looks toward 'meaningful' AI growth next year

By Wallace Witkowski

Intel already feeling AI 'tailwind' but material sales won't show up until next year, CFO Zinsner says

The coming year could be one of stabilization for Intel Corp. as it begins to recognize material gains from artificial-intelligence spending, which could give its data-center business a surprise tailwind.

That's what Intel (INTC) Chief Financial Officer David Zinsner told an audience Wednesday at the Citi Global Technology Conference in New York, adding that one of the big surprises of the year has been better-than-expected data-center sales following a quarter in which the chip maker reported its largest quarterly loss on record.

The chip giant is seeking to right a foundering ship after falling behind companies like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD), which are widely seen as the top beneficiaries in the AI-chip gold rush.

Zinsner said that while Intel was already seeing sales tailwinds for data-center products from a fevered buildout of infrastructure designed to handle AI workloads, the company doesn't expect "material" sales -- those in the hundreds of millions of dollars -- until 2024.

Back in June, one Wall Street analyst was making a case for Intel's "material AI opportunity."

"I think that next year we'll be material," Zinsner said Wednesday, adding that it can take months to get accelerator systems into place.

Zinsner, however, cautioned the inventory reductions in the data-center business that the company has suffered from over the past several quarters were "likely to continue through the rest of this year."

"We do expect that to be down quarter-over-quarter, but I think it's safe to say that it's at least tracking better than we had anticipated," the CFO said.

After that, the data-center business will have the "opportunity for a tailwind" like the company's PC business is seeing right now, where "instead of bleeding through inventory, our customers now have to buy everything from us."

"I think as we go into 2024, I think there's a real opportunity for us to see meaningful growth from AI," Zinsner said.

-Wallace Witkowski

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09-06-23 1548ET

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