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Intel Gains Deep Learning Capabilities With Vertex.AI Buyout

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Intel Gains Deep Learning Capabilities With Vertex.AI Buyout

Intel (INTC) adds robust deep learning capabilities with the acquisiton of Seattle, WA-based Vertex.AI.

In a bid to add robust deep learning capabilities across various operating verticals, Intel INTC recently acquired Vertex.AI, a Seattle, WA-based startup. Per the home page of Vertex.AI will join Intel’s Artificial Intelligence Products Group.

Per TechCrunch, Intel confirmed the deal. The report also states that the entire seven-member team comprising founders Brian Retford, Choong Ng and Jeremy Bruestle, will join Intel’s Movidius team. However, the financial terms have been kept under wraps.

In a statement to TechCrunch, the company revealed, “With this acquisition, Intel gained an experienced team and IP to further enable flexible deep learning at the edge.”

Notably, Intel’s stock has returned 3.7% over the past six months, outperforming the 2.9% rally of the industry.

Focal Points of the Acquisition

Vertex.AI develops deep learning compilation tools and otherrelated technologies. The startup introduced its flagship machine learning (“ML”) product – PlaidML – in October 2017. PlaidML is an open source developer tool on Github, for deploying robust Artificial Intelligence (AI) models.

PlaidML supports multiple device types, comprising Windows, OpenCL, Keras, MacOS, and Linux, among others. PC hardware featuring OpenCL-capable GPUs of companies including Intel, AMD or NVIDIA NVDA, support PlaidML platform.

The startup’s home page further reveals that Intel intends to develop PlaidML platform as an open source tool. PlaidML is also slated to adopt Apache 2.0 license, soon. Now part of Intel, Vertex.AI, is looking forward to accelerate flexible deep learning solutions for edge computing.

AI Driven Acquisitions to Strengthen Growth Segments

Intel has acquired notable AI-driven startups in the past which has aided the company across various verticals considerably, particularly across its Data Center Group (“DCG”) and Internet of Things Group (“IoTG”).

Buyouts like Movidius, Nervana, Saffron, among others deserve a mention in this regard. Although Altera is a part of Intel’s Programmable Solutions Group or PSG, the buyout helped Intel to gain access to FPGAs chips which are used for deep-learning applications.

Intel’s focus on expanding presence in the AI market is reflected in robust growth witnessed in company’s DCG and IoTG segments in second quarter fiscal 2018 results. Both DCG and IoTG revenues surged 26.9% and 22.2%, on a year over year basis to $5.55 billion and $840 million, respectively.

Buyout to Aid Intel Keep Pace With Market Trends

Tech companies are ramping up their AI portfolios to meet emerging demands. The basic needs can only be met when the companies enhance their software systems to incorporate modern deep learning capabilities. This in turn helps them make AI more accessible to their clientele.

In fact, per Gartner data, 40% of new enterprise applications deployed by service providers will comprise AI technologies, by 2021.

Per MarketsandMarkets data, the deep learning market is projected to grow at a CAGR of 41.7% to reach $18.16 billion by 2023 from 2018. Notably, the market’s valuation was $2.28 billion at the base year of 2017.

Consequently, we are of the opinion that the deep learning tools are crucial for an AI-driven future. To this end, the acquisition of Vertex.AIis expected to be a tailwind for Intel, going ahead.

To Conclude

Exploring new end-markets including self-driving, where the company is concentrating extensively, will help in expanding its total addressable market (“TAM”).

The company’s leading position in PCs, strength in servers, growing position in software and IoT segments along with headway in process technology are all growth drivers.

Intel’s move of buying Vertex.AI is encouraging and augurs well.

Zacks Rank & Other Stocks to Consider

Intel carries a Zacks Rank #2 (Buy).

Mellanox MLNX and Logitech International S.A. LOGI, are other stocks worth considering in the same sector. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mellanox and Logitech have a long-term earnings growth rate of 15% and 8%, respectively.

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