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Intel Gets A Much Needed Win
It's been a very difficult year for Intel (NASDAQ: INTC). The company's strategy to build out a world-class foundry business has been slow to show results, spending on artificial intelligence (AI) infrastructure has put a damper on demand for server CPUs, the PC market isn't rebounding all that strongly, and Intel's own AI chip efforts are falling short.
On top of all that, the company announced mass layoffs earlier this year to bring down costs and suspended its dividend. Former CEO Pat Gelsinger then abruptly retired, leaving Intel's overall strategy up in the air. Intel did manage to finally lock down billions in grants from the CHIPS act to support its manufacturing efforts, a rare piece of good news for the company over the past year.
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There's one more piece of good news for Intel as 2024 comes to a close: The company's second-generation discrete graphics cards appear to be a hit, at least compared to its inaugural effort. Intel put in a lot of work over the past two years fixing the myriad problems that plagued its entry into the market, and it now appears to have a winner on its hands.
Selling out at retailers
The Verge reported on Tuesday that Intel's B580 graphics card, which is priced at $249 and generally outperforms pricier options from both Nvidia and AMD, is selling out at retailers. A quick look on Amazon shows that ship dates for the card have slipped to January, and it's currently sold out on Newegg.
An Intel spokesperson told The Verge that demand for the B580 has been high and many retailers have sold out of their initial stock. The company expects to provide weekly replenishments of the Limited Edition version that it sells directly.
Investors don't know how much stock was initially available, so no conclusions can be drawn about sales volume. Even so, this is a welcome change of pace.
Intel launched its first-generation A-series graphics cards in late 2022. While they showed promise, software bugs and immature drivers drove potential customers away. Intel has greatly improved the software situation since then with frequent driver updates, and it appears to be enough to convince gamers to give its products another shot.
Going after the mid-range portion of the market, while not as lucrative as the high end, is a smart move. The $200 to $300 range has been underserved for the past few years, and there are a large number of PC gamers with aging mid-range cards ready for an upgrade. According to Steam's hardware and software survey, Nvidia's GTX 1060, GTX 1650, RTX 2060, GTX 1050 Ti, and GTX 1660 SUPER are among the top 15 graphics cards used by Steam players, and they're all multiple generations old.
Shaking up the market
Intel's A-series graphics cards failed to change the dynamics of the graphics card industry. The company's market share has been a non-factor, as software issues were too much to overcome. This time around, Intel has largely fixed its software issues and delivered enough performance at a low-enough price to provide PC gamers with a compelling alternative to Nvidia and AMD.
Intel likely isn't finished with its B-series family, with the potential for higher-end and lower-end graphics cards to arrive next year in addition to the upcoming B570, priced at $219. The company will have to contend with new graphics cards from Nvidia and AMD, both of which are expected to announce next-generation products soon.
Intel may finally do what it set out to do in 2022 with its entry into the graphics card market: Shake up a duopoly and provide a third choice for PC gamers. With nearly everything else going wrong for the company, the graphics card business could be a rare bright spot as it hobbles into 2025.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Intel, and Nvidia. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.
