Intel, Samsung Results Rallies Seen Short-Lived on AI Challenges

Winnie Hsu and Charlotte Yang
5 min read

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(Bloomberg) -- Intel Corp. and Samsung Electronics Co. have shed a total of $227 billion in market value this year on their lack of leadership in artificial intelligence.

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While results this week from both companies provided immediate relief for their stocks, investors and analysts say they still have a long way to go to catch up.

The US firm behind the once ubiquitous “Intel Inside” labels has been hurt by a costly effort to start a foundry business as it also fends off upstart AI chip designers like Nvidia Corp. Korean TV and smartphone giant Samsung is struggling with its own foundry dreams, and has fallen behind a smaller rival in AI memory.

The gulf between the winners and losers “won’t be narrowed any time soon,” said Wong Kok Hoong, head of institutional equities sales trading at Maybank Securities Pte., adding that Intel’s AI sales were weaker than projected despite better-than-expected earnings. “AI will be an important sector for the next five years, or even 10 years.”

AI has upset the global chip valuation hierarchy. Samsung’s market cap is now less than one-third that of Taiwan Semiconductor Manufacturing Co., the main outsourced manufacturer of Nvidia’s chips. They had been on par just four years ago. Intel, once the world’s largest chipmaker, has seen its gap with TSMC widen to a record of over $700 million.

‘Near-Term Relief’

Intel’s shares surged as much as 7.8% in premarket trading on Friday after its results and sales outlook sparked optimism that it’s capable of reclaiming some lost market share. Chief Executive Officer Pat Gelsinger said the company “got a lot done” with its recent restructuring, though not everyone is convinced.

Intel is “still a shadow of its former self,” Vital Knowledge founder and analyst Adam Crisafulli wrote in a note. “On the call the company acknowledged that its Gaudi AI chip would fall short of the $500 million sales target for this year, underscoring how the firm is essentially a non-entity in the present AI boom.”

Samsung also provided some cheer Thursday as it cited “meaningful” progress in a customer’s qualification test for its most advanced memory chip. Its stock jumped in Seoul on the news but closed the day little changed. On the downside, the firm missed profit estimates for its semiconductor business, it’s facing a glut of legacy chips in China and competition continues to mount in consumer electronics.

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