Intel turns shock Q2 revenue with $12.9B in income as AI drives development

Intel reported that its second-quarter revenues and earnings had been above expectations, because the chip large noticed vital development in AI-related chip gross sales.

On a non-GAAP foundation, Santa Clara, California-based Intel reported internet revenue of $500 million, or 13 cents a share, in contrast with a revenue of $1.1 billion, or 28 cents a share, a 12 months earlier, on revenues of $12.9 billion, down 15% from a 12 months in the past for the second quarter ended July 1.

Analysts anticipate Intel to publish a loss per share of three cents a share, whereas income was anticipated to be $12.14 billion. In after-hours buying and selling, Intel’s inventory worth is up 6.43% at $36.80 a share.

“Our Q2 outcomes exceeded the excessive finish of our steering as we proceed to execute on our strategic priorities, together with constructing momentum with our foundry enterprise and delivering on our product and course of roadmaps,” mentioned Pat Gelsinger, Intel CEO, in an announcement. “We’re additionally well-positioned to capitalize on the numerous development throughout the AI continuum by championing an open ecosystem and silicon options that optimize efficiency, value and safety to democratize AI from cloud to enterprise, edge and shopper.”

Gelsinger returned to Intel in 2021 as CEO in an try to show Intel round after a number of exhausting years of producing delays. Intel additionally faces heavy competitors from Superior Micro Gadgets (AMD), which has designed extra modern chips than Intel and gained market share for years now. Gelsinger mentioned Intel is on observe to ship $3 billion in value financial savings in 2023.

David Zinsner, Intel CFO, mentioned in an announcement, “Sturdy execution, together with progress in direction of our $3 billion in value financial savings in 2023, contributed to the upside within the quarter. We stay centered on operational efficiencies and our Good Capital technique to help sustainable development and monetary self-discipline as we enhance our margins and money era and drive shareholder worth.”

Intel closed the quarter with 122,200 workers, down from 128,200 a 12 months in the past and 125,500 within the first quarter. For Q3 steering, Intel mentioned it expects to report non-GAAP earnings per share of 20 cents on income of $12.9 billion to $13.9 billion.

In an analyst name, Gelsinger mentioned he was inspired on the firm’s progress with manufacturing investments.

“We proceed to make good progress on our 5 [manufacturing] nodes in 4 years,” he mentioned. “That culminates with 18A.”

He additionally mentioned Intel has made positive aspects with superior packaging with its innovation on PowerVia “bottom energy,” which runs energy by means of the again aspect of a chip as an alternative of the entrance. Intel has a $20 million growth underneath manner in Arizona for a chip manufacturing facility and it’s submitting papers for 3 extra submissions associated to the U.S. CHIPS Act, which is able to subsidize semiconductor manufacturing investments.

Gelsinger mentioned he believes Intel has labored by means of stock points and he believes that Intel is regaining misplaced market share.

“Merely put, it was an excellent quarter,” he mentioned.

The Shopper Computing Group reported Q2 revenues of $6.78 billion, down from $7.68 billion a 12 months in the past, with a revenue of $1.04 billion, up from a revenue of $876 million a 12 months in the past. On this group, Intel is on observe to launch its Meteor Lake PRQ in Q3 to deliver AI to the PC at scale, and it’ll launch its code-named Arrow Lake and Lunar Lake processors in 2024.

General Shopper Computing Group income was decrease on the contraction of the bigger market and laptop maker stock reductions. Intel continues to make investments in graphics processing items (GPUs) and it has a wholesome order quantity for its Gaudi GPUs/accelerators.

“Each launch will get higher to cowl extra of the accelerator market,” Gelsinger mentioned.

The Datacenter and AI group Q2 report revenues of $4.0 billion, down from $4.69 billion a 12 months in the past, with an working lack of $161 million, up from an working lack of $80 million a 12 months in the past. On this group, Intel is launching its code-named Emerald Rapids product in This fall, and Sierra Forest in 1H24. Intel mentioned income was down on general market contraction and aggressive strain.

“We now have a chance to carry out higher within the fourth quarter,” mentioned Zinsner in a name with analysts.

Community and edge was $1.36 billion, down from $2.21 billion a 12 months in the past, with a lack of $187 million, in contrast with a revenue of $294 million a 12 months in the past. Intel mentioned the sector was decrease on edge and telco demand softness and elevated community inventories.

Mobileye was $454 million, down from $460 million a 12 months in the past, with a revenue of $129 million, down from $190 million a 12 months in the past.

Intel foundry providers was $232 million, up from $57 million a 12 months in the past, with an working lack of $143 million, up from a lack of $134 million a 12 months in the past.