Data-center sales jumped 59% and Intel says it cannot make chips fast enough, but its contract-manufacturing arm still has no marquee outside customer.
Intel reported second-quarter results that beat Wall Street expectations, with revenue climbing 25% — its fastest quarterly growth since 2011, or nearly 15 years. The stock rose about 4% in extended trading.
Revenue reached $16.1 billion, ahead of the $14.42 billion analysts had expected. Adjusted earnings came in at 42 cents a share, double the 21 cents forecast.
The growth is being powered by surging investment in AI infrastructure, which is lifting demand for Intel's server chips. Revenue at its data center arm rose 59% to $6.3 billion, expanding far faster than the company's largest unit, the division that makes PC processors, where sales grew 13% to $8.9 billion.
Demand is running ahead of what Intel can produce. Its finance chief said data center clients are asking for more chips than the company is able to make. Intel also said it has struck 10 multiyear supply deals with buyers of its server processors, some fixing prices and others centered on the volume of chips supplied.
The outlook topped expectations as well. Intel projected adjusted earnings of 38 cents a share this quarter on revenue of $15.8 billion to $16.8 billion, above the 27 cents and $15.1 billion analysts had modeled.
One piece of the turnaround is still missing. Intel's contract-manufacturing arm posted sales of $5.8 billion, up 31% from a year earlier, but it primarily makes the company's own chips, and Intel again stopped short of naming a big new external client that shareholders and prospective customers keep hoping for. Its first publicly named foundry customer under chief executive Lip-Bu Tan, Fortinet, signed on earlier in the week to have security chips built on an older manufacturing technology. Heading into the report, the stock had dropped 28% in July.
Cover image: “Intel Headquarters in 2023” by Coolcaesar, Wikimedia Commons, CC BY-SA 4.0, resized, re-encoded.
