Intel reported revenue of US$13.6 billion in a 7% increase from the same quarter a year earlier, but logged a US$3.7 billion loss that was less than the market had anticipated.
It forecast revenue in the current quarter would range from US$13.8 billion to US$14.8 billion.
Shares soared more than 15% in after-market trades.
“The next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic,” Intel CEO Lip-Bu Tan said in the earnings release.
“This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings.”
A hot AI trend of digital “agents” specialising in handling computer tasks independently means more work for networks using the kinds of processing units made by Intel local networks rather than cutting-edge GPUs in datacentres, according to Tan.
Shares in Intel took off late last year after AI giant Nvidia announced it would invest US$5 billion in its lagging rival.
Nvidia joined Japanese investment giant SoftBank and the US government in backing the once-dominant chipmaker, which has fallen behind in recent years after missing key technology shifts.
President Donald Trump’s administration surprised the tech industry last year by taking a 10% equity stake in Intel, recognising the strategic importance of the company that powered the PC and internet revolution with its processors.
Intel largely missed the smartphone boom and failed to develop competitive hardware for the AI era, allowing Asian manufacturers TSMC and Samsung to dominate the custom semiconductor market.
Most notably, Intel was blindsided by Nvidia’s rise as the world’s leading AI chip provider.
Nvidia’s graphics processing units (GPUs), originally designed for gaming consoles, have become the essential building blocks of artificial intelligence systems, with tech giants scrambling to secure them for their data servers and AI projects.
Tan, who took over as Intel CEO a year ago amid layoffs and market challenges, has acknowledged the difficulty of turning the company around, particularly as US-China trade tensions complicate the semiconductor landscape.
“Intel delivered the kind of report that the bulls needed to justify a stock that’s soared over the past year, with data centre momentum and foundry progress both pointing in the right direction,” Emarketer analyst Jacob Bourne said of the earnings.
“These results make Intel’s turnaround look less like a hope-fuelled blip and more like a steadier, longer-term trajectory.”