Intel, the American semiconductor company, reported second-quarter earnings that significantly exceeded market expectations, driven by increased demand for central processing units (CPUs) for artificial intelligence (AI) data centers. The company also provided a positive outlook for its third-quarter performance, leading to a nearly 10% surge in its stock price in after-hours trading.
On July 23, Intel announced that its revenue for the second quarter reached $16.128 billion, a 25.4% increase from the same period last year, far surpassing the market forecast of $14.42 billion.
Excluding one-time costs, the adjusted earnings per share (EPS) stood at 42 cents, double the market expectation of 21 cents. The adjusted net income was $2.197 billion, a turnaround from a loss in the same quarter last year.
The adjusted gross margin, which is revenue minus production costs, was 41.8%, exceeding the market estimate of 38.8%.
However, under Generally Accepted Accounting Principles (GAAP), Intel reported a net loss of $11.033 billion. This was influenced by a $12.529 billion accounting loss related to the value of Intel shares held under a contract with the U.S. government. This loss reflects changes in stock value and does not represent actual cash outflow. The operating income, which reflects the company's core performance, was $1.796 billion, a recovery from a loss in the same quarter last year.
The improvement in performance was driven by the data center and AI business, which generated $6.262 billion in revenue, a 59% increase year-over-year. Operating income for this segment rose nearly fourfold to $2.474 billion, attributed to the growing demand for server CPUs as AI services expand.
Revenue from semiconductors for PCs and internal data processing increased by 13% to $8.877 billion. Although product sales volume declined, the overall revenue grew due to a higher proportion of sales from premium products.
Intel's foundry business revenue rose 31% to $5.765 billion, with operating losses reduced by over $1 billion to $2.089 billion compared to the same period last year. This foundry revenue includes internal transactions from other Intel divisions.
Looking ahead, Intel forecasts third-quarter revenue between $15.8 billion and $16.8 billion. The midpoint of $16 billion significantly exceeds the market estimate of $15.1 billion. The adjusted EPS forecast is also higher at 38 cents, compared to the market expectation of 27 cents.
To meet the rising demand for AI semiconductors, Intel plans to increase its capital investment for the year from $18 billion to $20 billion, focusing on expanding production equipment, factory facilities, and semiconductor substrate production capacity.
Intel CEO Pat Gelsinger stated, “AI is driving unprecedented demand for computing. We will secure growth opportunities in CPUs, custom semiconductors, semiconductor assembly technology, and our foundry business.”
* This article has been translated by AI.
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