Intel’s lagging fortunes could have been different if it had made a single investment.
In 2017 and 2018, the tech company had the chance to take a 15% stake in OpenAI for $1 billion, Reuters reported, citing four people with direct knowledge of the discussions. On top of that, Intel could have bought another 15% stake if it offered OpenAI its hardware at cost, according to two of the people.
OpenAI courted Intel as an investor because it would have lowered the startup’s reliance on Nvidia, whose chips are now a mainstay in the AI sector.
But Intel passed on the deal, partly based on the belief that generative AI models would not gain traction in the near future, leaving the company unable to recoup its investment, according to three of the sources interviewed by Reuters.
A spokesperson for Intel declined to comment to Fortune.
Since then, Intel has struggled to gain a foothold in the red-hot AI sector, and its stock has plummeted, losing 58% of its value just this year. Meanwhile, OpenAI leads the market after releasing its popular AI chatbot, ChatGPT, in 2022. After experiencing its worst stock decline in 50 years last week, Intel’s $84 billion market cap is just about equal to OpenAI’s most recent valuation of $80 billion.
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Although Intel was one of the world’s most important chipmakers two decades ago, the company has failed to adequately take advantage of the AI mania that has made rival Nvidia one of the most valuable companies in the world.
For years, Intel focused its resources on enabling CPUs, like those that power laptops and desktops, for handling AI processes, instead of prioritizing GPUs, graphic chips used in gaming, which are more effective at handling the myriad calculations required by AI, Reuters reported. Rivals like Nvidia and Advanced Micro Devices (AMD), in contrast, succeeded by working with GPUs, while Intel largely missed the boat. In the third quarter, Intel will release its Gaudi 3 AI chip, which CEO Pat Gelsinger said will be able to outcompete Nvidia’s H100 GPUs.
Intel’s earnings last week fell far short of analyst expectations, leading to a 26% single-day selloff that pushed its market cap below $100 billion for the first time in 30 years. Gelsinger told employees last week that the company will cut 15% of its workforce, or about 15,000 jobs, in a major cost-cutting effort.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Gelsinger wrote in the memo.
Intel passing on the OpenAI investment mirrors other missed opportunities by giant companies that failed to see the future clearly. In 2000, Blockbuster famously turned down an offer to buy a fledgling Netflix for $50 million. The streaming company is worth upwards of $250 billion today. During the tech boom of the late ’90s, Yahoo turned down the chance to buy Google for $1 million.
This story was originally featured on Fortune.com