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Intel (INTC) Boosts AI Portfolio With Habana Labs Acquisition

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Intel (INTC - Free Report) announced that it has completed the acquisition of Habana Labs — an Israel-based fabless semiconductor company that specializes in AI chip development.

The deal, worth almost $2 billion is likely to aid bolstering Intel’s portfolio of AI Accelerators in its data center business.

Per a report from Reuters, Habana has raised funds worth $120 million till date that includes $75 million in a funding round led by Intel Capital last year.

According to the terms of the deal, Habana will continue to operate as a separate business unit and will report to Intel’s Data Platforms Group.

Habana Buyout is a Prudent Move

The buyout will augment Intel’s portfolio by adding a high-performance training processor family and standards-based programming environment to cater to AI workloads. Intel and Habana’s combined expertise and IP is likely to deliver best in-class AI products to meet diverse performance needs of customers.

Markedly, Habana’s Gaudi AI Training Processor enables efficient and flexible system scale-up and scale-out. Gaudi-based large node training systems deliver significantly higher throughput than systems built with the equivalent number of GPUs.

Also, Habana’s Goya AI Inference Processor is exhibiting admirable inference performance including throughput and real-time latency in a highly competitive power envelope. Such upsides are likely to ramp up Intel’s footing in the AI space.

From Habana’s perspective, exposure to Intel’s resource strength in AI — including software’s, algorithms and research — will enable the company to ramp up its business abilities.       

Intel Corporation Price and Consensus

 

 

Efforts to Charge Up AI Offerings Bode well

Intel has remained focused on accelerating its presence in the fast-growing AI silicon market and bringing AI technology down to the chip level. The company upholds the notion that a broad mix of technology is essential for harnessing the power of AI.

Markedly, the company expects the AI space to be worth more than $25 billion by 2024. In fact, Intel expects to generate more than $3.5-billion AI-driven revenues in 2019, which indicates 20% year-on-year increase.

Intel’s Habana acquisition follows a string of AI-related acquisitions undertaken in the past few years that include — Movidius, Nervana, Altera and Mobileye.

In fact, the company has rolled out Nervana Neural Network processors to support deep learning processes. Moreover, Intel unveiled latest Movidius visual processing unit to accelerate complex computer vision, edge media and inference applications. Also, increasing investments in development of inference-enabled chips are anticipated to boost Intel’s self-driving initiatives and register new deal wins from Mobileye.

Moreover, the chipmaker’s new 10 nanometer technology-based AI processor, Springhill, is being developed at its Haifa facility in Israel.

In conclusion, rapid proliferation of AI into hardware system calls for effective solutions to support processing of workloads.  Moreover, Intel is leaving no stone unturned to ramp up its efforts in the AI trained inference server chip market against NVIDIA (NVDA - Free Report) and Xilinx .

According to an insight from IDC, worldwide spending on AI systems is projected to be $37.5 billion in 2019. The research firm expects the tally to hit $97.9 billion in 2023 at a CAGR of 28.4% between 2018 and 2023. This is likely to propel Intel’s to deliver efficient solutions to handle workloads and improve performance.

Zacks Rank & Another Key Pick

Currently, Intel carries a Zacks Rank #2 (Buy).

Another top-ranked stock in the broader technology sector is Marchex, Inc. (MCHX - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Marchex is currently pegged at 15%.

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