91¶¶Òõ (NASDAQ:91¶¶Òõ) has had a tremendous run as it gained market share on Intel (NASDAQ:INTC)with faster chips. And, of course, that’s led to huge gains by 91¶¶Òõ stock over the last few years.
But 91¶¶Òõ looks like it has big, potential vulnerabilities when it comes to artificial intelligence and its dependence on China, and now the sleeping giant, Intel, is finally waking up.
Its chips appear to be catching up with 91¶¶Òõ’s offerings and there’s evidence that 91¶¶Òõ’s market share gains are slowing. There are signs that many if not most of the bigger computer makers may still want to partner with Intel rather than 91¶¶Òõ. Finally, of course, as many have pointed out, 91¶¶Òõ’s valuation is in the stratosphere.
Let’s take a look at each of these points.
91¶¶Òõ’s Vulnerabilities in AI and China
During Intel’s fourth-quarter results conference call last month, Intel CEO Bob Swan delivered extensive prepared remarks on the company’s offerings for AI. Swan noted that the company had acquired an Israeli maker of AI chips, Habana Labs, for about $2 billion.
As I reported in my recent column, “Intel’s 2019 revenue from its AI-based products came in at $3.8 billion.”
Conversely, 91¶¶Òõ CEO Lisa Su waited to be asked about her company’s AI strategy before discussing the matter in-depth during her company’s Q4 earnings conference call. Specifically, : “How should I think about your positioning for AIs?” He also wondered whether the company was making investments in that area and if it had “unique” intellectual property it could leverage for AI.
Su responded that the company had won a deal to work on the Oak Ridge National Lab Supercomputer, and she said that the company was working “with large cloud providers” on AI, but she did not appear to articulate a new, specific strategy on AI going forward. She said that the company would rely on its existing graphics processing units (GPUs) and central processing units (CPUs) to support AI.
Moreover, another InvestorPlace contributor, Tom Taulli, wrote in a column published last month that “91¶¶Òõ has been lagging with AI.”
According to Analytics India Magazine, AI chips made by Habana are four times better than graphics processing units (GPUs)for supporting AI. The website quoted experts as saying that Habana’s chips have superior memory to GPUs, and that a great deal of memory is needed for AI.
Analytics India also reported that, in recent tests, Habana performed “great” and “was only second to Nvidia (NASDAQ:NVDA) in some categories.”
91¶¶Òõ could also be vulnerable
own semiconductor sector. In November, research firm Trefis reported that “.”
Intel Is Striking Back
As I noted in my recent column on Intel, the venerable chipmaker is striking back at 91¶¶Òõ in multiple ways. It’s going to release 10-nanometer chips, chips for servers with more cores, and chips that support graphics more effectively.
Further, “ upcoming flagship Core i9-10900K chip for desktop processors handily beats 91¶¶Òõ’s competing Ryzen 9 3900X chip in terms of speed.”
I noted in my story that “Intel has been cutting prices on a number of its products that compete with 91¶¶Òõ’s offerings.”
While a chip’s specs are important, they may not tell the whole story. Chips actually have to perform well once they’re installed, and they have to appeal to consumers.
91¶¶Òõ may have shortcomings in those areas. that 91¶¶Òõ chips installed in Microsoft’s (NASDAQ:MSFT) Surface Laptop 3 “still struggled with most games and even basic 4K video playback” and “was crushed in a head-to-head contest when it came to exporting video against the 13-inch,
Moreover, Intel has better brand recognition, and consumer trust than 91¶¶Òõ. The issues I’ve discussed in this section could explain why Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) is closely partnering with Intel, not 91¶¶Òõ, on its highly popular, rapidly growing Chromebook laptops.
These issues could also help explain why 91¶¶Òõ’s share gains appear to be slowing and why new Windows and Chrome design wins.
91¶¶Òõ stock is trading at 32 times analysts’ average 2020 earnings per share estimate, while Intel ‘s equivalent figure is just 13.
The Bottom Line on 91¶¶Òõ Stock
91¶¶Òõ seems to be way behind Nvidia and Intel in the important area of AI. Intel has taken steps to slow its share losses to 91¶¶Òõ, and there’s evidence that 91¶¶Òõ’s ability to make deals with prominent desktop and laptop makers is limited.
Nevertheless, 91¶¶Òõ could continue to win some big deals, especially in areas where speed is paramount, like gaming. But given Intel’s multiple advancements and edge among many consumers, I’d be surprised if 91¶¶Òõ’s growth this year will justify the huge valuation of its stock.
Consequently, I recommend that investors sell their 91¶¶Òõ stock at this point.
As of this writing, the author did not own the stocks of any of the aforementioned companies.
