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Intel (INTC<\/a>) stock rocketed more than 16% higher in after-hours trading following a first quarter earnings report that beat analysts\u2019 expectations on the top and bottom lines and provided better-than-anticipated Q2 guidance on strong data center sales.<\/p>\n Intel said it expects revenue of between $13.8 billion and $14.8 billion for the second quarter. Wall Street was anticipating $13.03 billion.<\/p>\n For Q1, Intel saw adjusted earnings per share (EPS) of $0.29 on revenue of $13.6 billion. Wall Street was anticipating EPS of $0.01 and revenue of $12.36 billion, according to Bloomberg analyst consensus data.<\/p>\n The company saw EPS of $0.13 and revenue of $12.67 billion in the same quarter last year.<\/p>\n \u201cThe next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic. This shift is significantly increasing the need for Intel\u2019s CPUs and wafer and advanced packaging offerings,\u201d Intel CEO Lip-Bu Tan said in a statement.<\/p>\n \u201cWith a solid foundation in place, we are addressing this opportunity by listening to our customers and driving their success with our technical expertise and differentiated IP,\u201d he said. \u201cThis deliberate reset to how we operate drove a sixth consecutive quarter of revenue above our expectations, as well as new and deepened relationships with strategic partners.\u201d<\/p>\n Intel\u2019s Data Center and AI business generated $5.1 billion in revenue, versus expectations of $4.41 billion.<\/p>\n While Intel missed out on the initial AI boom due to its lack of chips capable of running AI models, it\u2019s beginning to grab its own slice of the AI bonanza.<\/p>\n That\u2019s because as AI agents, semi- or fully autonomous AI bots that can perform tasks on users\u2019 behalf, continue to become more popular, central processing units (CPUs) like the ones Intel makes are becoming increasingly important to data center companies and hyperscalers.<\/p>\n The reason? While AI models still largely run on GPUs or similar offerings from Amazon (AMZN<\/a>) or Google (GOOG<\/a>, GOOGL<\/a>), the tasks that AI agents perform, such as browsing websites or searching for data in spreadsheets, rely on CPUs.<\/p>\n And that\u2019s making the humble chip far more popular.<\/p>\n Despite the Data Center revenue beat, Intel acknowledged that demand is still outstripping supply, though the company said it will continue to ramp up supply each quarter.<\/p>\n Intel is also contending with the fallout from the broader memory chip shortage, which is suppressing PC sales.<\/p>\n According to the International Data Corporation, the global PC market will decline 11.3% in 2026, though revenue is expected to grow 1.6% due to higher average selling prices.<\/p>\n<\/p><\/div>\n For the quarter, Intel\u2019s Client Computing revenue, which includes sales of chips for PCs, topped out at $7.7 billion. Wall Street was anticipating $7.1 billion.<\/p>\n Intel scored some major deals in Q1. The company announced it will work with Elon Musk on his planned Terafab facility, which will produce chips for SpaceX (SPAX.PVT<\/a>), xAI, and Tesla (TSLA<\/a>).<\/p>\n Intel also said it is entering into a multiyear arrangement with Google that will see its Xeon CPUs power AI, inference, and other workloads for Google Cloud.<\/p>\n Separately, Intel announced that it will repurchase a 49% stake in the fabrication facility it sold to Apollo for $11.2 billion in 2024 for $14.2 billion, the company said in a statement.\u00a0(Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)<\/em><\/p>\n The various moves have helped boost Intel stock 77% year to date as investors bank on the continued success of its massive turnaround effort.<\/p>\n Email Daniel Howley at <\/em>dhowley@yahoofinance.com<\/em><\/a>. Follow him on X at <\/em>@DanielHowley<\/em><\/a>.<\/em><\/p>\n Click here for the latest technology news that will impact the stock market<\/strong><\/a><\/p>\n Read the latest financial and business news from Yahoo Finance<\/strong><\/a><\/p>\n<\/p><\/div>\n