Intel (INTC) To Buy Nervana For Deep Learning Technology

Intel Corporation (NASDAQ:INTC) announced yesterday that it is acquiring Nervana Systems, an artificial intelligence startup based in San Diego. Though Intel didn’t disclose the exact value of the deal, as per some media reports it is said to be worth over $350 million.

Why this Move?

We note that the deal comes at a time when Intel is shifting its focus from the traditional desktop PC market to its data center business, which is registering significant growth. With this deal, Intel will be better positioned to enhance its prowess in data center as well as machine learning, which is gradually gaining prominence.

Internet of Things (IoT) is slowly but gradually making its way into our lives. With more and more connected devices, a huge amount of data is generated that needs to be interpreted to gain insights. With this move, Intel will be in an advantageous position to gain expertise in deep learning (an aspect of machine learning used in training the software) that finds its application in IoT.

Scope

With this acquisition, Intel will integrate Nervana’s technology into its chips to create more powerful and intelligent products. Given the fact that more than 90% of the servers used worldwide for this type of processing jobs run on Intel’s chips, there is huge scope for this technology.

Currently, NVIDIA Corporation’s (NASDAQ:NVDA) Graphic Processor Units (GPUs) are used for the purpose of training machines for deep learning. However, there are several additional functionalities in these GPUs that are not required for this job. On the other hand, Nervana’s dedicated accelerator and software that the company is developing at the moment are tailor made to accomplish such tasks and could prove to be beneficial for clients.

Zacks Rank

At present, Intel has a Zacks Rank #2 (Buy).

Some better-ranked stocks in the broader technology space are LinkedIn Corporation (NYSE:LNKD) and Logitech International SA (NASDAQ:LOGI) , both sporting a Zacks Rank #1 (Strong Buy).