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Intel Corporation (INTC - Free Report) is gearing up to become a major provider of solutions for the Artificial Intelligence (AI) market, which is anticipated to be worth $5.05 billion by 2020 as per MarketsAndMarkets.com. The company recently announced a plethora of products, technologies and investments, which will augment its presence in the AI market.

AI Techniques Gain Adoption

AI techniques like machine learning, deep learning and natural language processing (NLP) have been used by companies like Alphabet (GOOGL - Free Report) , Facebook, IBM and Microsoft to develop computer systems that can translate text into different languages and recognize objects in pictures.

Apple’s Siri, Microsoft’s Cortana, Amazon’s Alexa virtual personal assistants, IBM’s Watson, and Google-DeepMind’s AlphaGo program are some of the prime examples of the usage of AI techniques. Further, popular applications like Netflix and Pandora rely on AI algorithms to recommend program contents to their users.

AI techniques have gained immense traction over the last couple of years due to massive demand for analysing unstructured data like tweets, social media posts, photos and videos. The availability of powerful Graphic Processor Units (GPUs) from the likes of NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) made parallel processing much faster and cheaper.

Intel Integrates Xeon and Nervana

Intel is now focused on solidifying footprint in the AI market through the integration of its Xeon processors with GPUs, field-programmable gate arrays (FPGAs) and the Nervana platform, which it acquired in Aug, 2016. Nervana is an expert in accelerating deep learning algorithms.

Currently, Intel powers 97% of data center servers running AI workloads and its processor solutions of Xeon and Xeon Phi are most widely deployed processors for deep learning inference and training.

The first integrated product – Lake Crest – is expected to be available by the end of 2017. Further, the company announced a new product – Knights Crest – in the pipeline.

Intel now expects “Nervana’s technologies to produce a breakthrough 100-fold increase in performance in the next three years to train complex neural networks, enabling data scientists to solve their biggest AI challenges faster.

Additionally, Intel expects the next generation Xeon Phi processors to deliver up to four times better performance than the previous generation for deep learning. Code-named Knights Mill, the co-processor will be available in 2017.

Acquisitions to Expand Footprint

Apart from Nervana, the Movidius acquisition also expands Intel’s AI product portfolio. Movidius Myriad 2 vision processing unit (VPU) is a significant enhancement to Intel’s RealSense 3D cameras.

Further, the acquisition of Altera Corp in Jun, 2015 helped Intel to gain access to FPGAs chips, which are used for deep-learning applications. FPGAs can be reprogrammed to desired application or functionality requirements after manufacturing.

Moreover, Intel will offer the Saffron cognitive platform in its latest push to gain AI market share. The company acquired Saffron in Oct 2015. Per Intel “Big data can happen on small devices, as long as they’re smart enough and connected. Saffron’s technology, deployed on small devices, can make intelligent local analytics possible in the Internet of Things.”

Intel Collaborates with Google

Further, Intel is collaborating with Google on software and other technology that will provide enterprises an open, flexible and secure multi-cloud infrastructure for their businesses. The partnership comprises technology integrations including Kubernates open source container management, machine learning, security and Internet of Things (IoT).

Conclusion

Intel’s focus on gaining footprint in the AI market is driven by the fact that its core personal computer business is slowing. However, Data Center and the IoT business hold significant growth promise. Moreover, Intel recently announced $250 million investment in autonomous driving technology. We believe that the aggressive investments are likely to boost the company’s chip sales, which will drive top-line growth going ahead.

Zacks Rank & Key Pick

Intel carries a Zacks Rank #3 (Hold). NVIDIA is a better-ranked stock sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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