Intel has reported fiscal results for its second quarter that handily beat market expectations. Powered by surging demand for artificial intelligence infrastructure, the chipmaker posted its fastest revenue growth in over a decade and offered strong guidance for the upcoming quarter. But investors remain watchful as the company still searches for a major anchor customer for its cutting edge foundry business.
During the second quarter earnings call on Thursday, the company announced revenue of $16.1 billion. This represents a 25% increase year on year and marks the fastest single quarter expansion rate in 15 year history. Adjusted earnings per share reached 42 cents, which is double the 21 cents projected by Wall Street analysts.
The largest chunk of revenue still comes from the personal computer sector. The client computing division grew 13% to reach $8.9 billion. However, the data center unit expanded much faster. Driven by massive investments in server processors for artificial intelligence tasks, data center sales spiked 59% to reach $6.3 billion. Chief Financial Officer David Zinsner stated that customer demand for these chips is currently outstripping supply. To manage this wave, the company has secured 10 separate long term supply agreements for server hardware.
Intel CEO Lip Bu Tan emphasized that the current technology landscape is generating unprecedented computational needs. The company plans to sustain this trajectory by raising capital expenditures substantially next year. This funding will target factory equipment to scale the manufacturing business. Intel Foundry posted a 31% revenue increase to $5.8 billion this quarter, with progress on its upcoming 14A manufacturing node running ahead of schedule.
Despite progress on factories, securing a major technology client for the leading node remains a challenge. The only announced customer is Fortinet, which relies on a more mature process to build security chips. On the profitability front, gross margin recovered to 42%, a massive jump from the 2.5% reported during the same quarter last year. Higher pricing and a larger volume of high margin products helped secure this recovery.
For the third quarter, the company expects revenue to land between $15.8 billion and $16.8 billion. Adjusted earnings per share are projected at 38 cents. Both figures sit comfortably ahead of what analysts had modeled. The stock closed down 2.33% at $100.23 during regular trading but rallied after hours following the earnings release.
