On Tuesday at Taiwan’s Computex tech conference, Intel (INTC) announced its new Xeon 6 processors. This new rollout comes alongside recent AI chip launches from AMD and Nvidia. The three titans are fighting for dominance in the hot AI sector. Intel’s Xeon 6 processor promises improved performance and power efficiency for high-demand data center workloads compared to its predecessor. Intel also revealed that the prices for its Gaudi 2 and Gaudi 3 AI accelerators are lower than those of other companies’ chips, positioning them as more cost-effective solutions. Furthermore, Intel provided details on its Lunar Lake processors, expected to ship in Q3 of this year. They’re designed to cater to the AI PC category and compete with Nvidia's and AMD's AI-specific desktop chips.

Why Intel Is Feeling The Heat

With the new Xeon 6 processor, Intel is stepping out of the shadows. When it comes to AI, the company has mostly been on the sidelines, watching while Google, Meta, and Microsoft have scooped up Nvidia chips. Unlike Nvidia and AMD, which solely design chips, Intel both designs and manufactures its own chips, although its foundry business has been struggling recently. In 2023, the company reported a greater operating loss of $7 billion compared with 2022. Intel has also lost ground to overseas competitors like Taiwan Semiconductor Manufacturing Company (TSMC). However, with almost $20 billion in funding from the federal government’s CHIPS and Science Act, Intel can improve its R&D and manufacturing capabilities to potentially boost its position in this competitive market.

What The Analysts Are Saying

In mid-May, Chris Caso at Wolfe Research changed his bearish stance on INTC to a “peer perform” rating. At that time, the stock had been down 37% this year. While noting the company’s ongoing challenges, he believed its stock would perform on par with its peers. He projected greater margin growth down the road (next calendar year into 2026), which may not be good enough for short-term speculators. As of Wednesday, the average analyst recommendation for Intel is a hold—specifically, 3 buys, 26 holds, and 3 sells. INTC has an average price target of $38.06. Intel stock is up 2.26% to $30.72.