Intel forecasts second-quarter revenue exceeding Wall Street expectations, driven by robust demand for its server chips powering artificial-intelligence data centers. Shares of Intel surged 15%, adding $49 billion to its market value.
The company projects revenue between $13.8 billion and $14.8 billion, surpassing the estimated $13.07 billion. This resurgence follows CEO Lip-Bu Tan's strategic revival plan, which includes asset sales, layoffs, and securing significant investments and government deals.
Intel is capitalizing on a new opportunity in advanced central processing units (CPUs) as cloud providers shift from AI model training to deployment. Finance chief Dave Zinsner noted, "The CPU (is) having a renaissance here. We're starting to be a meaningful beneficiary of the AI investments that are happening."
While graphic processing units (GPUs) are used for large-scale mathematical operations, CPUs are better suited for AI agents with reasoning capabilities. Intel has also elected to raise chip prices to offset rising production costs.
The company secured a significant win with Elon Musk's Tesla as a major customer for its next-generation 14A process, aiming to manufacture chips at its Terafab project in Austin, Texas. Intel also expanded its AI CPU partnership with Alphabet's Google and joined Musk's Terafab project for SpaceX and Tesla.
First-quarter revenue reached $13.58 billion, beating estimates, with the data center and AI segment reporting $5.1 billion. Despite high competition from rivals like Nvidia and AMD, Intel's adjusted first-quarter earnings per share were 29 cents, exceeding the 1-cent estimate.