Intel Lifts Forecast as Data Chip Surge Cements its Top Spot

Intel said 2018 is looking better than expected thanks to strong demand for the chips that power cloud computing, according to Bloomberg.

Growth in the data center group has become one of the key indicators of Intel’s overall performance, and investors are focused on whether that unit can maintain the double-digit revenue-expansion rate executives have promised. Intel gave them what they were looking for in the first quarter, with revenue in that group up 24 percent. Based on a strong start to the year, Intel raised its full-year forecast by $2.5 billion, and sales in the first quarter also came in higher than analysts were expecting. The shares, which have outperformed other industry stocks this year, jumped as much as 8.9 percent in extended trading following the announcement.

Sales in the current period will be $16.3 billion, the company said in a statement. That compares with an average analyst estimate of $15.6 billion. Earnings per share will be 85 cents. Intel now sees 2018 revenue of $67.5 billion. Intel’s forecast signals that major server customers need the company more than ever to expand their ability to store, transmit and process the massive amounts of data that their customers generate and demand.

In the first quarter, sales climbed 9 percent to $16.1 billion, Intel said. Profit was $4.5 billion, or 93 cents a share, compared with $3 billion, or 61 cents, in the same period a year earlier. Analysts on average were projecting adjusted profit of 71 cents on sales of $15.1 billion. Intel’s PC chip unit had first-quarter sales of $8.2 billion, up 3 percent from a year earlier. The data-center unit had revenue of $5.2 billion, up 24 percent.

Sales of memory chips rose 20 percent, while revenue from chips for a new range of devices that are gaining the ability to compute and connect, known as the internet of things, climbed 17 percent. Intel said it expects to spend more this year on improving production. It’s now aiming to invest $14.5 billion on new plants and equipment, $500 million more than it said it was budgeting for 3 months ago.