Intel shares surged on Friday after the chipmaker announced revenue grew 7% on renewed demand for data centre CPUs.
Concerns that Intel was losing out to its peers in the AI race have been tempered by these results, which show the group’s offering is finally helping boost sales after a prolonged period of falling quarterly sales.
Sales for the first quarter rose 7.2% compared to a year ago to hit $12.67bn, with AI data centre sales doing much of the heavy lifting.
While investors will be delighted with the first-quarter performance, the strong share price reaction can largely be attributed to robust guidance for the second quarter, when Intel sees sales rising to £13.8bn – $14.8bn, well above analyst expectations.
Intel is also guiding 20 cents earnings per share in Q2, versus analysts’ estimates of 9 cents.
“There’s beating earnings expectations and then there’s smashing them – with no hint of hyperbole, it’s fair to say Intel has done the latter with its latest quarterly results,” said Russ Mould, investment director at AJ Bell.
“Chief executive Lip-Bu Tan is strident in asserting that Intel is seeing a big boost as businesses move beyond just training up machines and begin putting them to work on specific tasks. This means increasing demand for ‘Intel inside’ as customers tap its flagship central processing units.
“For years Intel has looked like yesterday’s man in the chip space, but the company’s latest earnings suggest it has caught up – helped by an unconventional investment from the Trump administration and additional funds from Nvidia last year.”
The US government invested $8.9bn in Intel at $20.47 per share and has enjoyed a 4x return, based on a premarket price of $83.30 per share.