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Intel as the tech giant gears up for the highly anticipated release...
Intel (INTC.O), the renowned chipmaker, surprised the market with a quarterly profit as the PC market slump began to show signs of improvement.
The company’s shares surged by approximately 6% after it forecasted third-quarter earnings that exceeded Wall Street expectations.
Over the past year, the demand for personal computers had declined due to the surge in purchases during the pandemic. Consequently, inventory piled up, leading to a significant downturn in PC shipments.
However, recent data from Canalys revealed a notable improvement, with PC shipments falling by only 11.5% in the June quarter compared to a much more severe 30% decline in the previous two quarters.
This positive development in the PC market allowed Intel to anticipate better margins for the third quarter.
The company had been facing challenges with its margins in recent quarters, but it expressed optimism about the second half of the year, expecting an improvement.
Analysts pointed out that Intel’s outperformance was primarily driven by a rebound in desktop sales, which had been at a near-record low in the previous quarter.
This, in turn, added nearly $9 billion to Intel’s market value, which had fallen behind that of its rivals, including Nvidia (NVDA.O), Advanced Micro Devices (AMD.O), and Broadcom (AVGO.O).
However, Intel faced challenges in its data center and artificial intelligence business, with sales falling 15% from the previous year.
This decline was attributed to increased spending by cloud giants Microsoft and Alphabet, benefiting Nvidia, a company specializing in AI chips.
Despite challenges, Intel remained optimistic about its prospects in the AI and high-performance computing industries.
The company recently partnered with Ericsson to work on advanced packaging and fabricate chips using Intel’s cutting-edge manufacturing technology.
Looking ahead, Intel provided an adjusted current-quarter earnings per share forecast of 20 cents, beating analysts’ estimates of 16 cents.
It also projected adjusted revenue of about $12.9 billion to $13.9 billion, with the midpoint exceeding estimates but still implying a 12.6% year-on-year decline in Intel’s business.
Overall, the chipmaker showed resilience in the face of adversity and benefited from the easing of the PC market slump. With its focus on advanced packaging and AI computing, Intel aimed to maintain its position in the industry and capitalize on emerging opportunities.
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