The semiconductor giant says that it expects double-digit year-over-year growth to continue for its data center business with “multiple long-term supply agreements with key customers” in place as it sees pent-up demand for CPUs in AI data centers.
Intel is finally starting to feel the benefits of the AI infrastructure boom, with the chipmaker reporting data center revenue growing 22 percent year over year in the first quarter.
The Santa Clara, Calif.-based company reported first-quarter earnings on Wednesday, saying that its revenue for the period grew 7 percent year-over-year to $13.6 billion, largely thanks to the double-digit growth of its data center business. This was well above the $12.4 billion average estimate by Wall Street analysts, even exceeding the high-end estimate.
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Intel’s stock price was up more than 14 percent in after-hours trading.
While the semiconductor giant remains behind Nvidia and other rivals in developing competitive accelerator chips for the market, the chipmaker is seeing pent-up demand for server CPUs to power AI workloads in such environments.
This has resulted in a shortage of Intel CPUs, which has likely impacted every partner “across the board,” including OEMs and cloud service providers, the company’s global channel chief, Dave Guzzi, told CRN in a February interview.
Intel CFO David Zinsner said the company’s first-quarter financial performance reflected the “growing and essential role of the CPU in the AI era and unprecedented demand for silicon as well as our disciplined execution to expand available supply.”
“We remain focused on maximizing our factory network to improve available supply and meet our customers’ needs throughout the year,” he said in a statement.
The company’s first-quarter data center revenue was $5.1 billion.
In its earnings presentation, Intel called its CPUs “foundational” to inference and agentic AI workloads as the CPU-to-accelerator ratio narrows, resulting in a greater number of CPUs needed in relation to accelerator chips like GPUs deployed into data centers.
The company said that it expects double-digit year-over-year growth to continue with “multiple long-term supply agreements with key customers” in place.
“The next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic,” said Intel CEO Lip-Bu Tan in a statement. “This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings.”
In Intel’s PC business, first-quarter revenue grew 1 percent year-over-year to $7.7 billion despite “growing inflationary pressure,” the company noted in the presentation.
The chipmaker also said its Core Ultra Series 3 processors marked the “best product launch” it has seen in five years for the business unit.
