Intel Stock Surpasses Dot-Com Era Peak Driven by Strong Performance Outlook
Intel's stock reached a historic high after the chipmaker released a sales forecast that far exceeded Wall Street expectations. The company stated in a release on Thursday that revenue for the quarter ending in June is expected to be between $13.8 billion and $14.8 billion. Bloomberg-compiled data shows analysts had an average expectation of $13.0 billion.
Intel's stock rose as much as 28% to $85.22 in New York trading after the open on Friday. Before the report's release, the stock had already accumulated an 81% increase this year.
The optimistic outlook indicates that Chief Executive Officer Pat Gelsinger’s challenging revitalization plan is progressing. Last year, he arranged massive investments for Intel, helping the company improve its balance sheet. The results released on Thursday show he is delivering on his promise to improve the company’s operations.
“Everyone is starting to shift orders to Intel, and I think this is just the beginning,” said Thomas Hayes, chairman of Great Hill Capital. “It’s gone from despair to euphoria in a very short period of time.”
The report showed that surging demand for data center chips to support the massive expansion of artificial intelligence is boosting demand for Intel’s flagship Xeon server processors. These general-purpose semiconductors are once again becoming a focus for companies trying to turn their AI software into revenue-generating services.
Gelsinger said in an interview that Intel’s performance was “robust” and exceeded expectations. He expects demand for processors used in AI systems to continue to grow, and said the company is “highly focused” on increasing factory capacity, which currently cannot fully meet all orders.
“Demand is very strong. We’re working closely with the teams to make sure we can deliver, meet the demand, but we’re still supply constrained given the continued growth in customer demand,” Gelsinger said.
Intel has also successfully navigated another challenge facing the PC industry: a shortage of memory chips.
Strong demand for server products has attracted memory chip suppliers to concentrate resources on high-speed products for these devices. This has squeezed capacity for standard memory chips used in mobile phones and personal computers, leading to lower production and higher prices for these consumer-facing devices.
Watch: Intel gave a strong sales forecast for the current quarter, indicating that the once-struggling chipmaker is finally starting to benefit from the massive buildout of artificial intelligence infrastructure.
In addition to making progress in production, Gelsinger has also improved Intel’s balance sheet through external investment – so much so that the company has repurchased the equity in an Irish factory it had previously been forced to sell to raise capital.