Instant Reaction: Intel's Revenue Shatters Wall Street Estimates

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This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.

**Carol Massar** (0:20)
Here's how Ian King, who's been covering this company and this sector for many years, put it, Intel delivered a surprisingly strong revenue forecast for the current period, indicating that a surge in data center spending is helping fuel the chipmakers turnaround. The outlook underscores Intel's gains with data center customers, which are clamoring for chips to satisfy demand for AI computing. Sales in that segment soared 59% last quarter, more than double the pace of Intel's overall right now.

**Tim Stenovec** (0:48)
Chief Executive Officer Lippoutan saying, the CPU is taking off in data centers. All right, let's get to it. Back with us is, of course, Mandeep Singh with our Bloomberg Intelligence team. He oversees tech research here, global tech research for our Intelligence team. This looks like a really strong report.

**Mandeep Singh** (1:05)
It is, and it's led by something we all expected, data centers. You know, that's where you're seeing the demand. We saw that in Google's results yesterday. And look, the CPU side is something that Intel has had a monopoly over the years. They obviously lost the plot, but now they seem to be coming back. The only thing I'm not very sure about is how it translates into sustainable demand, because everyone else is also making CPUs, whether it's NVIDIA, whether it's Google, you know, even the likes of AMDs.
They're all focused on CPUs. So Intel is not a monopoly that it used to be. And that's where the expectations going in the quarter were really low. And they did beat that.

**Carol Massar** (1:58)
So then why are people buying Intels rather than AMDs or NVIDIAs? Like, is it a commodity, this part of the business?

**Mandeep Singh** (2:06)
So if you're just looking for a CPU, Intel still has the foundry where they make the most CPUs, and it makes sense for anybody to go to Intel. If you're looking for systems, which is what Google said, they're selling TPU systems now. Right. A TPU system has got an accelerator, it's got CPU, it's got networking, it's got everything. That's what all these companies are doing with their data centers now, is they're selling a complete system where CPU is one of the building blocks.
Intel is not selling you a system. They're just selling you a chip.

**Tim Stenovec** (2:41)
Kind of says to me, not a great business plan.
Is it? So how do you make sense whether or not...

**Mandeep Singh** (2:48)
I think it's too early to compare Intel to the likes of NVIDIA or what Google told us with their TPU systems. It's still a very early stage opportunity for Intel on the data center side. Again, expectations were really rock bottom. So they came out, they beat that data center number by 700 million. Great. But if I look at the sustainability of what Google plans to do or what NVIDIA plans to do, Intel is not in that category yet. And that's where you need for them to execute much better on the data center side in terms of having a GPU, having more on the networking side, having a systems play, which is what we are hearing from AMD, by the way. That's what AMD is after. That's what Broadcom is after. So I'm not ready to put Intel in that basket of companies that have systems opportunities. Ready to get there?
I think it's a big challenge.
You have to remember, Intel underperformed for a period of five, six years where they just had things going down. So for them to come back, it's going to take a while. The foundry side is where they could get help from the US government stake, and they could land more customers in terms of foundry usage. But in terms of, again, comparing them to someone like NVIDIA, we are far off from that.

**Carol Massar** (4:16)
Should we compare them to NVIDIA?

**Mandeep Singh** (4:19)
I mean, NVIDIA is making their own CPUs, and NVIDIA will tell you they already generate up to $20 billion by selling CPUs as part of their system. So NVIDIA has already surpassed Intel in terms of the CPU side of that equation.

**Tim Stenovec** (4:36)
So what to Tim's question or Tim's point, Mandeep, what is again the role of Intel in the future in the world of semiconductors? There's still value there, there's still a good business there?

**Mandeep Singh** (4:50)
Yeah, so think of it as traditional data centers versus AI data centers.
For all the traditional data centers, Intel is great because they have those servers that companies were using that they need to refresh and now Intel has the ability to give them the latest servers, that by the way, you need latest CPU servers to run these agentic workloads. So when you deploy AI, so far it was just training for inferencing, you need CPUs and that's where if an enterprise is looking to refresh their old servers, they'll go for Intel, they won't buy NVIDIA systems because you don't need to do that for your traditional data centers. You buy NVIDIA systems for your AI data centers which need a lot more power, which have different specs all together.