Intel Corp. (INTC  ) has a Gaudi problem on its hands - the chipmaker revealed that its AI accelerator won't even make $500 million in 2024, falling short of CEO Pat Gelsinger's target of $1 billion to $2 billion.

What Happened: Gelsinger revealed during Intel's third-quarter earnings call that the Gaudi AI accelerator program will fall short of revenue targets due to a transition from second to third generation.

"The overall uptake of Gaudi has been slower than we anticipated as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3 and software ease of use," Gelsinger said.

"As a result, we will not achieve our target of 500 million in revenue for Gaudi in 2024. That said, taking a longer term view, we remain encouraged by the market available to us."

This comes at a critical time for Intel - the iconic chipmaker's stock is down nearly 55% in 2024 so far, which has drawn attention from rival Qualcomm Inc. (QCOM  ), which is reportedly eyeing a takeover of Intel.

While it is not clear if this will eventually materialize, it points to a weak phase that Intel is going through.

Three of the biggest chip makers - Nvidia Corp. (NVDA  ), Intel, and Advanced Micro Devices Inc. (AMD  ) - all have their respective data center business segments which have gained traction in 2023.

While Intel led in 2022, the company's data center revenue started declining in 2023, coinciding with Nvidia's rise. On the other hand, 2022 and 2023 were both lukewarm for AMD, but it started gathering pace in the fourth quarter of 2023.

Nvidia Rides AI Boost: Unsurprisingly, Nvidia's stock has also massively benefited from its dominance in AI chips - the Jensen Huang-led company has risen to the top, dethroning Apple on multiple occasions to become the world's most valuable company by market capitalization.

Nvidia's current market capitalization stands at $3.256 trillion, while Intel's is $92.73 billion and AMD's is $233.8 billion.

Gelsinger maintained an optimistic outlook, saying "We remain encouraged by the market available to us. There is a clear need for solutions with superior [total cost of ownership] based on open standards, and we are continuing to enhance the Gaudi value proposition."

For the quarter that just ended, Intel reported $13.28 billion in revenue, beating Street estimates of $13.02 billion.

Price Action: Intel's shares were up 6.8% in premarket trading on Friday at $22.98, according to Benzinga Pro data.

Nvidia's stock was up 1.1% at $134.27, while AMD stock was up 0.6% at $144.99.