Intel's (INTC.O), opens new tab upbeat revenue projections on Thursday masked a sore point for the embattled company: chips touted for artificial intelligence have not lived up to sales expectations.

The chipmaker scrapped its recent forecast that in 2024 it would sell more than $500 million worth of Gaudi accelerator chips, so called because they speed up the performance of AI applications.

In a call with analysts, CEO Pat Gelsinger attributed their slower uptake to software related to Gaudi and a recent transition from the second to third generation of the chip.

While the upbeat total revenue forecast pushed up Intel shares by about 5% in early trading on Friday, its stock remains more than 50% lower for the year as the chipmaker misses out on the AI boom and struggles with a turnaround.

The Gaudi disappointment underscores Intel's persistent AI travails, years after it declined to pick one strategy that could counter its skyrocketing rival Nvidia (NVDA.O), opens new tab. It also shows challenges Intel has faced in delivering on a promise to investors.

After the late 2022 launch of viral ChatGPT, powered by Nvidia GPUs, Gelsinger hoped Intel's AI chips could win new business.

When teams at Intel predicted they could sell at most $500 million, Gelsinger told his executives the figure was not high enough, according to a Reuters special report published Tuesday.

Intel had to project at least $1 billion when Nvidia's comparable sales were much higher, a source cited Gelsinger as saying. The company did so: in July 2023, Gelsinger touted a more than $1 billion "pipeline of opportunities" led by Gaudi.

Intel at the time had not secured enough supply from the contract chipmaker TSMC (2330.TW)
, opens new tab to meet the target, two sources told Reuters.

In an earlier statement, Intel said Gelsinger's comments reflected prospective deals accurately.

"No company converts 100% of its pipeline into revenue," Intel said. "We make no apologies for setting ambitious internal targets for our teams – and we will always try to exceed the goals we set for ourselves." ‍ Source: Reuters


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