Intel Corporation delivered promising news to investors Thursday, projecting second-quarter earnings that significantly exceed analyst predictions, driven by surging demand for the company’s server processors in AI-powered data centers.
The tech giant’s stock price climbed approximately 12% during after-hours trading following the announcement.
Intel anticipates generating between $13.8 billion and $14.8 billion in revenue for the upcoming quarter, surpassing the $13.07 billion forecast compiled by LSEG analysts.
Following several years of strategic missteps that left the once-dominant semiconductor manufacturer struggling to compete in the rapidly expanding artificial intelligence market, CEO Lip-Bu Tan implemented a comprehensive turnaround strategy. This plan focuses on strengthening Intel’s financial position through asset divestments and workforce reductions.
Tan has also negotiated substantial investments and partnerships with major players including the federal government, SoftBank, and Nvidia, providing Intel with essential resources for its manufacturing operations while boosting investor confidence in the company’s future prospects.
Although Intel initially missed opportunities during AI’s early growth phase, the company now sees potential in advanced central processing units as cloud service providers transition from developing AI models to implementing them in real-world applications.
“The CPU (is) having a renaissance here,” Chief Financial Officer Dave Zinsner told Reuters during an interview. “We’re starting to be a meaningful beneficiary of the AI investments that are happening.”
While graphics processing units handle the complex mathematical calculations needed for content generation, central processing units are more effective for tasks performed by autonomous AI systems with advanced reasoning abilities.
Intel’s success in meeting market demand will ultimately depend on the company’s capacity to produce processors efficiently without encountering manufacturing delays or supply chain disruptions.
The semiconductor company achieved a significant victory Wednesday when it secured Tesla, owned by Elon Musk, as the first major client for its cutting-edge 14A manufacturing process. This partnership involves producing chips for Musk’s Terafab initiative, a sophisticated AI chip facility planned for Austin, Texas.
Earlier this month, Intel strengthened its AI processor collaboration with Google’s parent company Alphabet and became part of Musk’s Terafab project alongside SpaceX and Tesla to manufacture processors for robotics and data center applications.
Intel’s first-quarter revenue reached $13.58 billion, exceeding analyst estimates of $12.42 billion.
The company’s data center and AI division generated $5.1 billion in revenue, outperforming projections of $4.41 billion.
Intel’s share price has surged more than 80% year-to-date and nearly 48% in April alone, as investors show renewed confidence in central processing units—the type of chip Intel has specialized in for decades.
However, competition remains intense in the CPU market, with rivals including Nvidia, Advanced Micro Devices, and Arm developing competing products to capture market share.
Intel reported a first-quarter loss of 73 cents per share due to over $4 billion in restructuring expenses. When adjusted for these charges, the company earned 29 cents per share, beating the anticipated 1 cent estimate.
