Will Strength in Cloud Infrastructure Space Drive Growth for Intel?

Intel Corporation INTC recently announced that it has joined forces with Amazon to power the Amazon Elastic Compute Cloud (EC2) R8i and R8I-flex instances. Growing reliance on real-time data processing, AI workloads is driving demand for flexible and robust cloud infrastructure among enterprises. AWS 8th Gen Amazon EC2 instances powered by Intel Xeon 6 effectively address these requirements.

The Xeon 6 integrated with Intel Advanced Matrix Extensions supports up to 2x AI inference and ML performance gains. The processors also enable the fastest DDR5 Support in the cloud with ensuring significantly higher bandwidth and low latency. This facilitates seamless use of machine learning applications and in-memory databases. With high-density computing power, enhanced AI acceleration, Xeon 6 empowers developers, data scientists and IT workers to innovate and scale with ease. 

Intel’s growing prowess in the cloud infrastructure space is driving growth in the Data center and AI Group. The company generated $3.9 billion in revenues from this segment, reflecting growth of 4% year over year. Per our estimate, the company is expected to generate $16.26 billion in revenues from this segment in 2025.

How Are INTC’s Competitors Faring?

Intel’s XEON 6 processors face competition from the processors of Advanced Micro Devices AMD and Arm Holdings ARM. AMD EPYC 9005 processors have showcased remarkable capabilities in compute-intensive workloads, power efficiency, seamless support for database management systems, in-memory analytics, media processing and more. Engineered with high core density, AMD EPYC 9005 effectively supports cloud native workloads. The company’s partnership with leading hyperscalers such as Oracle Cloud Infrastructure and Google Cloud is driving demand for AMD EYPC CPUs.

Increasing adoption of processors based on Arm’s architecture is also gaining ground in the cloud infrastructure space. Major companies such as Google Cloud, Ampere Computing, and Apple use the Arm architecture. These factors are likely to pose a challenge to Intel’s market expansion efforts with its Xeon 6 processors.

INTC’s Price Performance, Valuation and Estimates

Intel has gained 22.6% over the past year compared with the industry’s growth of 37.5%.

Going by the price/book ratio, the company's shares currently trade at 0.97 book value, lower than 36.3 of the industry average.

Intel’s earnings estimate for 2025 and 2026 have declined 46.43% to 15 cents per share and 5.56% to 68 cents, respectively, over the past year.

Intel stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research