San Francisco (United States) (AFP) – Shares in Intel soared on Thursday after it smashed quarterly earnings expectations in what could be a sign that the US chip maker is on a path to recovery. Intel reported revenue of $13.6 billion in a 7 percent increase from the same quarter a year earlier, but logged a $3.7 billion loss that was less than the market had anticipated. It forecast revenue in the current quarter would range from $13.8 billion to $14.8 billion. Shares soared more than 19 percent in after-market trades.
“The next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic,” Intel CEO Lip-Bu Tan said in the earnings release. “This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings.” A hot AI trend of digital “agents” specializing in handling computer tasks independently means more work for networks using the kinds of processing units made by Intel, local networks rather than cutting edge GPUs in datacenters, according to Tan.
Shares in Intel took off late last year after AI giant Nvidia announced it would invest $5 billion in its lagging rival. “Intel delivered the kind of report that the bulls needed to justify a stock that’s soared over the past year, with data center momentum and foundry progress both pointing in the right direction,” Emarketer analyst Jacob Bourne said of the earnings. “These results make Intel’s turnaround look less like a hope-fueled blip and more like a steadier longer-term trajectory.”
Nvidia joined Japanese investment giant SoftBank and the US government in backing the once-dominant chipmaker, which has fallen behind in recent years after missing key technology shifts. President Donald Trump’s administration surprised the tech industry last year by taking a 10 percent equity stake in Intel, recognizing the strategic importance of the company that powered the PC and internet revolution with its processors.
Intel largely missed the smartphone boom and failed to develop competitive hardware for the AI era, allowing Asian manufacturers TSMC and Samsung to dominate the custom semiconductor market. Most notably, Intel was blindsided by Nvidia’s rise as the world’s leading AI chip provider. Nvidia’s graphics processing units (GPUs), originally designed for gaming consoles, have become the essential building blocks of artificial intelligence systems, with tech giants scrambling to secure them for their data servers and AI projects.
Tan, who took over as Intel CEO a year ago amid layoffs and market challenges, has acknowledged the difficulty of turning the company around, particularly as US-China trade tensions complicate the semiconductor landscape. “A year ago, the conversation about Intel was about whether we could survive,” Tan said. “Today is about how quickly we can add manufacturing capacity and scale our supply to meet enormous demand for our products.”
Tan noted a recent announcement that Intel has joined Elon Musk’s companies in a project to make chips for AI, robotics, and data centers in space. Terafab, a manufacturing facility based near Austin, Texas, will aim to produce one terawatt of computing power per year, Musk said last month. That is slightly less than the total power generation capacity of the United States, according to an industry group. Musk said the project would be run jointly by his electric-vehicle firm Tesla and his rocket company SpaceX.
An “advanced technology fab” in Austin will have the facilities to design, manufacture, test, and improve each chip, Musk said. Musk did not give a timeline for the Terafab’s output, and has previously promised grand results from other projects on compressed time scales. “Elon and I share a strong conviction that global semiconductor supply is not keeping pace with a rapid acceleration in demand,” Tan said on the call.
© 2024 AFP
