Intel reported stellar first quarter earnings as strong demand for datacenter server chips and memory held strong. In after-hours trading, the company’s stock price is up 8 percent.
Intel generated more than $16.1 billion in revenue in the quarter, compared to expectations of about $15 billion. The company generated adjusted net income of $4.2 billion, or 87 cents a share. Analysts expected 72 cents a share on $15 billion in revenue.
“Coming off a record 2017, 2018 is off to a strong start. Our PC business continued to execute well, and our data-centric businesses grew 25 percent, accounting for nearly half of first-quarter revenue,” said Intel CEO Brian Krzanich, in a statement. “The strength of Intel’s business underscores my confidence in our strategy and the unrelenting demand for compute performance fueled by the growth of data.”
In other news, Intel hired Jim Keller, who was head of Tesla’s Autopilot self-driving car program and is also a veteran at leading major chip design projects. Keller has led the design of big chips at Advanced Micro Devices, PA Semi, and Apple. Pete Bannon, a longtime colleague, will take over Autopilot at Tesla, but it’s not clear what Keller will do at Intel.
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Intel could use someone like Keller, as the company has been lagging behind rival Advanced Micro Devices, which last year launched chips based on an innovative chip design dubbed Zen. AMD has been growing faster than Intel and gaining market share as a result.
But despite AMD’s gains, Intel didn’t appear to be hurt in the most recent quarter, as it continues to grow, albeit at a slower rate than AMD in the core PC processor business.
“Compared to the first-quarter expectations we set in January, revenue was higher, operating margins were stronger, and earnings per share was better,” said Bob Swan, Intel CFO. “Our data-centric strategy is accelerating Intel’s transformation, and we’re raising our earnings and cash flow expectations for the year.”
Intel said its Client Computing Group generated $8.2 billion in the first quarter, up 3 percent from a year earlier. The Data Center Group had $5.2 billion in revenue, up 24 percent. And Intel said that its self-driving car company Mobileye began operating self-driving cars in Israel.
“This shows how well the company is managing investing in the future while optimizing the current product lines,” said Patrick Moorhead, analyst at Moor Insights & Strategy, in an email. “Every single business unit was up, with the datacenter group leading the charge with 24 percent growth. And, at the other end, the company saw PCs increasing 3 percent. It was surprising seeing PCs’ revenue increase, given competitive pressures, but overall average selling prices and notebook volumes increased, which balanced out desktop volumes declining 6 percent.”
Intel said it would delay its 10-nanometer production until 2019 for volume shipments, but that didn’t dampen overall expectations, as Intel increased its estimates for future performance.
