It’s been a very difficult year for Intel (NASDAQ: INTC). Company’s strategy to build a world-class foundry business is slow to pay off, spending on artificial intelligence (AI) infrastructure has depressed demand for server CPUs, PC market is recovering not as strong, and Intel’s own efforts in AI chips are falling short.
In addition, earlier this year the company announced mass layoffs to cut costs and suspended its dividend. Former CEO Pat Gelsinger then abruptly retired, leaving Intel’s overall strategy up in the air. Intel has finally managed to secure billions in CHIPS Act subsidies to support its manufacturing efforts, a rare piece of good news for the company over the past year.
There’s one more piece of good news for Intel as 2024 draws to a close: the company’s second generation of discrete graphics cards appear to be a hit, at least compared to the first attempt. Intel has put a lot of work into solving the myriad of problems that plagued its entry into the market over the past two years, and it now appears the company has a winner on its hands.
The Verge reported Tuesday that Intel’s B580 graphics card, which costs $249 and generally outperforms both more expensive options Nvidia And AMDis sold out at retailers. Just a quick look Amazon shows that the ship dates for the card have been pushed back to January and it is currently sold out New egg.
An Intel spokesperson told The Verge that demand for the B580 is high and many retailers have sold out of their original stock. The company expects to offer weekly additions to the Limited Edition version that it sells directly.
Investors do not know how many shares were initially available, so no conclusions can be drawn about sales volume. Still, this is a welcome change.
Intel launched its first generation A-series graphics cards at the end of 2022. Although promising, software bugs and immature drivers drove potential customers away. Intel has vastly improved the software situation since then with regular driver updates, and it seems to be enough to convince gamers to give its products another chance.
Going after the mid-range of the market is a smart move, although not as lucrative as the higher end. The $200 to $300 range has been underutilized in recent years, and there are a large number of PC gamers with aging mid-range cards that are ready for an upgrade. According to Steam’s hardware and software research, 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 are all several generations old.
Intel’s A-series graphics cards failed to change the dynamics of the graphics card industry. The company’s market share was not a factor, as software problems were too much to overcome. This time around, Intel has largely resolved its software issues and delivered enough performance at a low enough price to give PC gamers an attractive alternative to Nvidia and AMD.
Intel likely isn’t done with its B-series family yet, with higher-end and lower-end graphics cards likely to hit the market next year, in addition to the upcoming $219 B570. The company will have to deal with new graphics cards from Nvidia and AMD, both of which are expected to announce next-generation products soon.
Intel could finally do what it set out to do with its entry into the graphics card market in 2022: shake up a duopoly and offer a third choice for PC gamers. With almost everything else going wrong for the company, the graphics card sector could be a rare bright spot as it stumbles 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 holds 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.
Intel Gets a Much-Needed Win was originally published by The Motley Fool
