Shares of Intel (INTC.O) rose 6% in premarket trading on Friday after rising expectations that AI improvements would lead to the chipmaker’s long-awaited turnaround. The company forecast third-quarter revenue to beat Wall Street expectations and raised its capital spending estimate for the year to $18 billion to $20 billion.
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Intel’s improving outlook reflects the growing use of its data center central processing units (CPUs) by customers building infrastructure for artificial intelligence (AI), as Chief Executive Officer Lip-Bu Tan positions Nvidia (NVDA.O) as a broader beneficiary of AI-driven semiconductor demand, despite the company’s accelerator chips.
“The capital increase reflects not only the cash flow upside and confidence in the visibility of demand from long-term contracts for products, but also confidence that foundry customers (for packaging and 14A wafers) will come,” Melius Research analysts said.
Tan has been strengthening Intel’s finances over the past year, garnering support from the U.S. government and major investors, as the chipmaker seeks to play a key role in Washington’s push to restart domestic semiconductor production.
“The aggressive capital increase is evidence that Intel is likely to see continued customer acquisition as the U.S. increasingly demands domestic semiconductor production,” D.A. Davidson analysts said.
Demand for data center CPUs has surged with the rise of AI agents, and Intel executives noted earlier this year that orders were outpacing the company’s production capacity.
