Intel: Smoke or Substance?

Gelsinger and Grove

Intel fascinates me ever since I wrote about them back in March of ’22. They were hated, and touted as a disaster. Pat Gelsinger took the reigns as CEO shortly before in Feb of ’21.

What initially drew me to Intel was Gelsinger’s comments about Grovian strategy. Before Gelsinger’s arrival, Intel had given up market share to competitors by becoming complacent. Now that Gelsinger is steering the boat, he is returning Intel to that once dominating Grovian strategy.

What made Grove so special? His effectiveness:

As President and later CEO, Grove brilliantly led Intel’s strategy and operations, established a near-monopoly on CPUs, and played a central role in the PC revolution. During this tenure as CEO from 1987–98, Intel’s stock price rose 32% a year.

Andy Grove implemented much of the original DNA of Intel.

From Berkeley Engineering:

In 1968, when Noyce and Moore left Fairchild to co-found Intel, Grove followed, joining as Intel’s director of engineering. He rose up the ranks, becoming president in 1979, CEO in 1987 and chairman in 1997.

Now we have Gelsinger at the helm, promising to take Intel to market leadership once again. It’s bold, and I keep hearing that it can’t be done.

Since his start as CEO, INTC stock has been flat: only up $2 per share, but they’ve bounced off the lows of Feb ’22 of ~$24 with 100% gain. Intel now sits at ~$50 as of today.

This 100% gain since February of ’22 has me thinking about Intel’s execution on becoming the market leader. How are they doing since Gelsinger took over?

Product Leadership

From WCCFTech:

Intel did reveal that its Gaudi 3 AI accelerator will offer 1.5 times higher performance than its previous counterpart, the Gaudi 2, along with a four times increment in BFloat16 performance, twice as much compute, and a 50% increase in memory capacities which gives us 144 GB versus 96GB on the current Gaudi2 accelerators. Moreover, it is expected that the accelerator will feature either HBM3 or HBM3e, which is expected to put it on par with current industry offerings, making it much more competitive and a viable alternative, especially when considering its perf/watt against NVIDIA’s H100 GPU.

It’s good to see them leaning into competition with NVIDIA and the rest of the industry.

Here is the chip:

The only thing I don’t like is how Intel is relying on TSMC to make a lot of their leading chips. What I’d like to see is Intel become the market leader and pull ahead of NVIDIA and the rest of the industry. This seems impossible from my point of view, but Gelsinger has surprised many in the last 2 years with his robust promises and execution. As long as he continues to execute with leading market products and creating the foundry system, I’ll be along for the ride.

Read more here: Library – Walsh Investment Strategy

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