Intel (INTC) is leaning into the artificial intelligence craze with its latest generation of data center chips. On Thursday, the company debuted its 5th Gen Intel Xeon processors during its AI Everywhere event in New York. The chips, which the company unveiled alongside its new Core Ultra line of processors for laptops, are part of Intel’s attempt to prove it can innovate at the same pace as rivals including AMD (AMD), Qualcomm (QCOM), and Nvidia (NVDA).
While the 5th Gen Xeon chip won’t replace Nvidia-style AI accelerators in terms of dedicated power, it does offer AI functionality of its own, while powering other high-performance computing operations.
“Designed for AI, our 5th Gen Intel Xeon processors provide greater performance to customers deploying AI capabilities across cloud, network, and edge use cases,” Sandra Rivera, the executive vice president of Intel’s Data Center and AI Group, said in a statement.
“As a result of our long-standing work with customers, partners, and the developer ecosystem, we’re launching 5th Gen Intel Xeon on a proven foundation that will enable rapid adoption and scale at lower [total cost of ownership].”
Intel says the 5th Gen chips provide a 21% performance boost over their predecessors and 36% more performance per watt. Improved performance per watt means that companies can push processor-intensive tasks while using less overall power. That results in an overall cost savings in the long run.
The chip giant estimates that companies upgrading to its 5th Gen chips will see a 77% improvement in total cost of ownership if they follow a five-year system refresh cycle.
Intel’s Data Center and AI business is its second-largest segment behind its Client Computing Group, which sells chips for consumer and business-grade laptops and desktops. The Client Group accounts for $31.7 billion of Intel’s $63.1 billion in total revenue in the company’s fiscal 2022. Data Center and AI made up $19.2 billion.
While both business segments have underperformed throughout 2023, they’ve steadily improved compared to the first quarter when Intel posted an adjusted loss per share of $0.04.
AI serves as a potential growth area for Intel. While Nvidia grabs all of the headlines for enabling the AI explosion, and rightfully so, Intel’s chips still serve an important role in helping to power some of the servers that use Nvidia’s products.
But the money, at least right now, is in AI accelerators. And Nvidia has a grip on that segment that experts say will remain tight for several years to come as competitors race to catch up to the graphics titan’s lead in not only hardware capabilities but software as well.
In the meantime, Intel continues to work to fend off AMD’s server business. And while AMD’s data center business is smaller than Intel’s — it brought in $6 billion in fiscal 2022 — it’s gaining steam.
Daniel Howley is the tech editor at Yahoo Finance. He's been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.
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