Intel Reports Strong Earnings. The Stock is Rising.

Intel stock jumped in late trading Thursday after the chip maker provided a revenue forecast for the September quarter that exceeded expectations.

The company’s CFO told Barron’s late Thursday that there is some “wallet shift” to rivals for their graphics processing unit chips (GPUs) for artificial intelligence. But he said that Intel could also benefit from additional demand for its AI chips and data center processors.
Nvidia
(NVDA) is the dominant leader in the AI GPU market.

Intel on Thursday reported second-quarter adjusted earnings per share of 13 cents, compared to Wall Street’s consensus estimate of a 4 cent loss, according to FactSet.

For the quarter, revenue came in at $12.9 billion, which was above analysts’ expectations of $12.1 billion.

For the current quarter, Intel provided a revenue forecast range of $12.9 billion to $13.9 billion, which, at the midpoint of the rage, was above the consensus of $13.2 billion.

Intel shares were up 5.7% to $36.50 in after hours trading following the earnings report.

In a phone interview with Barron’s, Intel Chief Financial Officer David Zinsner said the company will benefit from the rising interest in artificial intelligence applications, citing demand for its AI accelerator products and server processors. But the executive said there may be some “wallet shift” to GPUs in the second half of this year in the data center segment.

Last week,
Taiwan Semiconductor Manufacturing
Chairman Mark Liu also said the company saw signs that AI-related demand was taking sales away from traditional server chips.

Zinsner said the economy in China was softer than the company expected, but overall client computer processor sales were higher than expected with inventory issues now behind the company. However, he also noted the data center market still needs to work through high inventory levels for one or two more quarters.

Write to Tae Kim at [email protected]

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