AMD and Nvidia gain dominant market share in data center and AI processor segments, marginalizing Intel's position in AI infrastructure.

Intel stock plunged 58% in the last 12 months as the company failed to capitalize on emerging markets for new kinds of computing and chip applications, according to Doug O'Laughlin of SemiAnalysis. Advanced Micro Devices, Inc (NASDAQ:AMD) surpassed Intel's data center chip revenue in the last quarter, marking a significant reversal from 2022 when Intel's data center revenue was three times that of AMD. AMD has emerged as a formidable competitor, snatching Intel's market position in advanced general-purpose chips, dubbed central processing units, while Intel failed to capitalize on the burgeoning data center chip market and the graphics processing unit market, which catapulted Nvidia to a trillion-dollar valuation.

Despite these challenges, Intel retains substantial installed base advantages. The company still commands approximately 75% of the market for CPUs that go into data centers, though this dominance in unit volume has not translated to proportional revenue gains. Intel continues to lead in desktop and notebook CPUs and benefits from decades of developer investment in software built for Intel's architecture. Intel's 2024 revenue is estimated at approximately $55 billion, compared to Nvidia's approximately $60 billion, while the company has secured a chipmaking deal with Amazon leveraging its 18A technology and partnered with AMD to develop the x86 ecosystem.

ARM-based chips are increasingly taking center stage in Nvidia's current-generation AI systems, and ARM-based Windows laptops achieved significant market traction in 2024 following Microsoft's collaboration with ARM. Intel also lost share in the PC gaming market to AMD. The company is pursuing new growth avenues, targeting the launch of a new AI chip dubbed Falcon Shores in 2025, and has emphasized its focus on product portfolio development, manufacturing capabilities, and foundry services. However, Goldman Sachs' Toshiya Hari and other Wall Street analysts have flagged competitive and margin challenges ahead for the chipmaker. Intel is currently seeking a permanent chief executive after firing veteran CEO Pat Gelsinger in December, whose turnaround efforts, including attempts to compete with Taiwan Semiconductor Manufacturing Co (NYSE:TSM), failed to satisfy the board.