Intel Shares Surge as Second-Quarter Revenue Forecast Beats Estimates
- tech360.tv
- Apr 24
- 3 min read
Intel projects second-quarter revenue will surpass Wall Street expectations, driven by strong demand for its server processors used in artificial intelligence (AI) data centres. Shares of Intel climbed 19% in extended trading, adding USD 64 billion to its market value.
This surge extends the company’s 81% rebound so far this year. Nasdaq futures rose 0.3%, indicating traders anticipate a rise in the tech-heavy index.
The company expects revenue between USD 13.8 billion and USD 14.8 billion, exceeding an LSEG estimate of USD 13.07 billion. Intel's second-quarter adjusted per-share profit guidance of 20 cents also beat expectations of 9 cents a share.
After previous management missteps, Lip-Bu Tan initiated a revival plan. This plan aims to strengthen Intel’s balance sheet through asset sales and layoffs.
Tan also secured significant investments and formed deals with the U.S. government, SoftBank, and Nvidia. These partnerships provide crucial resources for manufacturing operations, fostering strong investor confidence in the firm’s long-term growth.
Although Intel missed the early stages of the AI boom, a new opportunity has emerged with advanced central processing units (CPUs). Cloud providers are now shifting from training AI models to deploying them, creating demand for these CPUs.
Tan stated about the resurgence in CPU demand, "This is not just our wishful thinking - it is what we hear from our customers, and it is evident in the demand profile for our products." Graphic processing units (GPUs) handle large-scale mathematical operations for content generation, while CPUs are better suited for autonomous AI agents requiring reasoning capabilities.
Part of Intel’s optimistic revenue projection stems from raising chip prices to offset the increasing production costs. However, the company’s ability to meet demand depends on maintaining large-scale processor manufacturing without bottlenecks or supply issues.
Intel recently secured a significant manufacturing win, naming Elon Musk’s Tesla as the first major customer for its next-generation 14A process. These chips will be produced at Musk’s envisioned Terafab project, an advanced AI chip complex.
Zinsner, a company representative, declined to provide financial specifics regarding the Terafab arrangement. Zinsner commented, "I think the details of this partnership are still being worked between Lip-Bu and Elon."
Michael Schulman, a partner at wealth management firm Cerity Partners, commented on Intel's future. Schulman stated, "The long-term trajectory for Intel is still a high-stakes gamble on its ability to transform from a legacy giant into a nimble foundry athlete that can legitimately challenge TSMC by 2030." Schulman added that if Intel successfully addresses silicon needs for the coming robotics and agentic AI boom, the current valuation could be seen as an enviable entry point.
The company's contract manufacturing business, known as foundry, reported first-quarter revenue of USD 5.4 billion. Intel's internal business accounted for most of this foundry revenue, with less than USD 200 million described by Zinsner as "legacy business that we have mainly on the wafer side."
Zinsner also indicated that Intel’s custom chip business, known as ASICs, is on track to achieve more than USD 1 billion in revenue this year.
Earlier, Intel expanded its AI CPU partnership with Alphabet’s Google and joined Musk's Terafab AI chip complex project with SpaceX and Tesla. These collaborations aim to produce processors for robotics and data centres.
First-quarter revenue reached USD 13.58 billion, surpassing estimates of USD 12.42 billion. Zinsner noted that some of these sales involved older or poorly functioning chips that Intel had previously shelved.
Zinsner explained to analysts, "What we were able to do in the first quarter was go through finished goods inventory and find opportunities to sell product we didn't think we would be able to move." Revenue in the company's data centre and AI segment was USD 5.1 billion, compared with estimates of USD 4.41 billion.
Competition in the CPU market remains intense, with rivals Nvidia, Advanced Micro Devices, and Arm also developing products to gain market share.
Intel reported a first-quarter loss per share of 73 cents, incurring more than USD 4 billion in restructuring charges. On an adjusted basis, the company earned 29 cents per share, beating the estimate of 1 cent.
Intel forecasts higher-than-expected second-quarter revenue, boosting share price by 19%.
The company expects second-quarter revenue between USD 13.8 billion and USD 14.8 billion, driven by AI processor demand.
Lip-Bu Tan's revival plan includes asset sales, layoffs, and strategic investments with partners like the U.S. government, SoftBank, Nvidia, Tesla, and Google.
Source: REUTERS
