Intel said it is raising its estimates for revenue this year because it sees strong growth related to the PC market, artificial intelligence, and self-driving cars.
The company was expected to post non-GAAP earnings per share of 68 cents, and it came in well above that at 72 cents share. Revenue was $14.8 billion in the quarter, up 9 percent from $13.5 billion a year ago.
“Q2 was an outstanding quarter with revenue and profits growing double digits over last year,” said Brian Krzanich, Intel CEO, in a statement. “We also launched new Intel Core, Xeon and memory products that reset the bar for performance leadership, and we’re gaining customer momentum in areas like AI and autonomous driving. With industry-leading products and strong first-half results, we’re on a clear path to another record year.”
The good results will likely give investors a sense of relief about the world’s largest chip maker, which faces competition from Qualcomm in mobile, artificial intelligence from Nvidia, and core PC microprocessors from Advanced Micro Devices, which launched its speedy Ryzen desktop processors and its Epyc server processors during the past quarter.
The competition from AMD will be closely watched, as AMD also reported a good quarter and will likely generate more revenue in the coming quarters from recent launches. AMD’s Ryzen and Epyc processors are based on its advanced Zen processor architecture. Those processors are 52 percent faster on a per-clock basis than the previous generation, and it’s not a simple matter for Intel to respond.
Intel, however, argues that its manufacturing technology remains a couple of years ahead of its rivals, giving Intel an advantage in production costs.
“Intel had a very good Q2. What struck me was the diversity of their revenue and their ability to grow in areas where many doubted they could see a lot of growth or success,” said Patrick Moorhead, analyst at Moor Insights & Strategy. “Even notebooks grew 20 percent, a big surprise to me. The things to factor in the future equation is when Nervana, Optane and MobileEye all get fully on-line, counterbalanced by some of the competitive impact in AI and general-purpose x86 processors. All in all, this was a very solid quarter and gives indications of some many positive things for the future for Intel.”
In terms of Intel’s business units, the Client Computing Group (PCs) revenues were $8.2 billion, up 12 percent from a year ago. The Data Center Group revenues were $4.4 billion, up 9 percent. The Internet of Things Group revenue was $720 million, up 26 percent. The Non-Volatile Memory Solutions Group reported $874 million in revenue, up 58 percent. And the Programmable Solutions Group had revenue of $440 million, down 5 percent.
“We feel great about where we are relative to our three year plan and heading into the second half. Intel’s transformation continues in the third quarter when we expect to complete our planned acquisition of Mobileye,” said Bob Swan, Intel chief financial officer, in a statement. “Based on our strong first-half results and higher expectations for the PC business, we’re raising our full-year revenue and EPS forecast.”
Intel now expects third-quarter revenue of $15.7 billion and full-year revenue of $61 billion, and GAAP net income of 72 cents for the third-quarter and $2.66 for the full year.