NVDA NVIDIA Corporation

Tech giants are hurriedly snapping up startups in the field of artificial intelligence, with Intel Corp. the latest to join a buying spree fueled by one of the hottest trends in the tech sector.

The chip giant on Tuesday announced plans to pay an undisclosed amount for Nervana Systems, a 48-employee company working on semiconductors, software and services to exploit a popular AI technique called deep learning.

Intel's move follows a deal disclosed Friday by Apple Inc. to purchase Turi Inc., a Seattle-based specialist in the field. The two acquisitions add to a string of 31 purchases since 2011 of AI startups by large companies tallied by venture-capital research firm CB Insights. The firm lists buyers that include Alphabet Inc.'s Google, Twitter Inc., Yahoo Inc., International Business Machines Corp. and Salesforce.com Inc.

Factoring in smaller acquirers, PricewaterhouseCoopers LLP counts 29 related acquisitions so far this year, suggesting the total deal count for 2016 will top the 37 deals announced last year.

"We are on a very swift and increasing pace," said Todson Page, the accounting and professional service firm's U.S. technology industry deals leader.

Industry executives link the activity to the quickly widening applications of AI, a broad term referring to ways to make computers emulate attributes of the human brain. An initial cycle of excitement about the technology arose in the 1980s and later fizzled, but interest boomed in recent years due to breakthroughs in the field known as machine learning, especially in the specific area of deep learning.

Instead of programming machines explicitly to, say, recognize a human face, deep learning allows computers to learn to perform the task by analyzing vast troves of images of faces. Apple, for instance, uses deep learning to analyze speech commands issued to Siri, the software used for a variety of tasks on iPhones. Other applications include detecting credit-card fraud, interpreting medical images, studying crop growth, and enabling drones and self-driving cars to navigate.

"AI is about to transform industry after industry," said Andrew Ng, a deep-learning pioneer who is chief scientist at Baidu Inc. and an associate professor at Stanford University.

Dollar figures for the AI acquisition binge are hard to come by—as are figures for individual AI transactions—because the big tech companies are swooping in on startups before they have built market valuations of a size that buyers would be compelled to disclose.

The buyers need talent more than technology, Mr. Ng said, since today's AI products quickly will need to be updated. Google, which led its peers with nine purchases, according to CB Insights, mined the AI research community in 2013 by buying DNNresearch, a company helmed by the influential University of Toronto AI researcher Geoffrey Hinton.

The following year, Google bought DeepMind Technologies Ltd., a London-based startup founded by Cambridge University graduates that some publications pegged at a price tag of more than $400 million. The DeepMind team developed AlphaGo, the AI software that made headlines earlier this year by defeating a South Korean master of the game Go.

Apple helped to ignite the recent consumer AI boom following its 2010 purchase of the startup Siri. In buying Turi, the company stands to benefit from the expertise of Carlos Guestrin, who holds a University of Washington machine learning professorship endowed by Amazon.com Inc.

Industry executives say an array of other companies feel a need counter AI results at younger companies like Google and Facebook Inc.

"They are arming up," said Matt Ocko, a managing partner at the venture-capital firm Data Collective, which invested in Nervana.

The pressures are particularly acute on companies that manage vast amounts of images or sounds, said Greg Papadopoulos, a venture partner at New Enterprise Associates, an investor in Turi. Companies that don't step up activity through acquisitions, he said, soon will face serious competitive threats.

Intel has special motivations. While its Xeon chips handle most computing tasks in data centers, rival Nvidia Corp. has popularized chips known as graphics processing units, or GPUs, to more quickly handle specialized chores associated with deep learning.

Nervana, which divides its staff between the California cities of San Diego and Palo Alto, has AI software that exploits GPUs but also expects to deliver a chip next year it says can complete deep learning tasks even more quickly.

Jason Waxman, a corporate vice president in Intel's data-center group, declined to say how it might use Nervana's chips. But Naveen Rao, Nervana's chief executive and co-founder, said Intel had unique manufacturing and technical expertise to help propagate the startup's technology.

"No matter how much money we raised, we would not have access to the same kind of technology as we will have at Intel," Mr. Rao said.

Write to Don Clark at don.clark@wsj.com

(END) Dow Jones Newswires

August 09, 2016 16:25 ET (20:25 GMT)

NVIDIA (NASDAQ:NVDA)
Historical Stock Chart
From Mar 2024 to Apr 2024

NVIDIA (NASDAQ:NVDA)
Historical Stock Chart
From Apr 2023 to Apr 2024