The tech industry is experiencing some of its most rapid changes due to AI and semiconductor technologies. On that topic, three Motley Fool contributors who cover tech and AI stocks collaborated to identify their top AI-focused semiconductor stocks today. They chose memory leader Micron Technology (NASDAQ: MU), industry leader Intel (NASDAQ: INTC), and AI chip design leader Broadcom.
Intel wants to catch Nvidia and TSMC simultaneously. Intel's Billy Duberstein: Intel has trailed other AI businesses in recent years and in 2024, with the stock down 25% while the Nasdaq has recovered roughly 8%.
That's reasonable—Intel is trying to catch Taiwan Semiconductor Manufacturing in chip production for several years. Success would mean Intel's chips would top the market again and Intel would become a profitable foundry for third parties.
Process technology leadership and acquiring new clients are difficult, but Intel has made good progress over the past year, hitting milestones on its anticipated timeframe to reach five chip nodes in four years.
Intel introduced its Gaudi 3 accelerators last week to compete with Nvidia GPUs. Intel's executives surprised by claiming the new Gaudi chips outperform the Nvidia H100 on various criteria. Gaudi may find a little portion of the AI industry, which is growing rapidly. Nvidia is already moving on to its next Blackwell processors later this year.
In addition to hardware, Intel is leading huge consortiums to establish open source AI programming tools and AI ethernet networking solutions, contesting Nvidia's CUDA and Infiniband products.
Intel also split its products and foundry sector financials, providing investors a sense of its earnings without foundry capital. Chip goods produced $12.4 billion in operating profit last year outside Intel's foundry. That's okay because Intel has lagged behind on process technology and this doesn't contain any Gaudi income. Intel's $160 billion market cap makes its valuation easy.
Naturally, Intel's foundry lost $7 billion last year. Given Intel's large capital outlays and depreciation before income, that's not surprising. Will Intel succeed? The company bought the first high-NA EUV equipment from ASML Holdings to support the effort. Intel also bought most of ASML's high-NA EUV machines for this year to catch up to TSMC in 2025.
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