Intel’s results prove: it doesn’t pay to bet against Trump

stock Intel Became one of the fastest growing technology stocks of the last year after jumping by about 326% and crossing a market value of half a billion dollars, the highest ever in its history, even in relation to its glory days in the nineties when it was still considered the largest chip company in the world.

Last night (Thursday) it became clear that if the president of the United States wants to – he can be Intel’s best salesman. It is not impossible that the president, who himself revealed that he was the bridesmaid of a chip deal between Intel anddark is also responsible for other technology giants that made and are making huge deals with the company from Santa Clara: the company reported sales of custom-made chips (XPU) – that is, chips manufactured in accordance with the structure requested by other technology companies – at an annual rate (ARR) of 2 billion dollars, three times compared to the corresponding quarter, and that the foundry division – Intel’s manufacturing plant reserved for external customers – exceeded expectations.

It is not impossible that the huge agreement announced earlier this year for the production of chips forTesla andSpice X In the Intel factories, the many rumors about the matter that he discovers Nvidia in production at Intel factories and that the expansion of cooperation with Google – He was also born with the government’s intervention, although we cannot be sure of that either.

The business of developing and manufacturing custom-made chips for cloud companies may become a $4 billion business by the end of the year, out of a market that, according to Intel CEO Lip-Bo Tan, is about $100 billion – and includes the activities of companies such as Broadcom and Marvel – but Intel also offers manufacturing and packaging services in factories in the US that manufacture with technology smaller than 2 nanometers.

Apart from custom chips, the total of Intel’s manufacturing activity abroad – which embodies Intel’s biggest recovery effort to get out of the windfall – reached $5.8 billion, higher than the expectations of $5.48 billion and 6% more than the corresponding quarter due to improvements in the output of the new production process, chips with 1.8 nm technology (produced under the 18A brand). According to the company, the yield of silicon wafers in the field improved by tens of percent during the year.

However, the division’s activity is still loss-making – with a decrease in losses to 730 million dollars due to an increase in the output of silicon wafers and a decrease in the manpower level. Intel is still required to invest billions of dollars in establishing manufacturing plants in the US and upgrading the plant in Ireland – currently the company’s only flagship plant outside the US that produces chips with advanced technologies. The factory in Kiryat Gat, which focuses on the production of “Intel 7” chips and is not related to the “foundry” business, is awaiting an upgrade that is apparently delayed due to the instability in the Middle East.

Annual growth of 59% in the standard processors

The sudden growth in Intel in the last two quarters is good news that brings color back into the lives of investors in the company – but it doesn’t necessarily have anything to do with Trump or even the new CEO Tan.

The shift in the AI ​​industry emphasizes the training of language models to run existing models and the search for low-cost processing power is leading all the cloud giants to purchase Intel’s standard chips – the XEON processors – core processors intended for operation in server farms.

In the previous quarter, Intel surprised investors with a sharp first jump in this activity, and now it reports an annual growth of 59% to 6.3 billion dollars in the second quarter with an operating profitability of 40%, and a total operating profit that increased by a billion dollars from quarter to quarter.

In such a case, these are standard processors manufactured in Kiryat Gat, Ireland and the USA – but are responsible for approximately 70% of the company’s revenues and a total jump of 70% compared to last year in activities related to artificial intelligence.

Now, CFO David Zinsner boasts – it is no longer possible to say that Intel is not on the wave of artificial intelligence – with most of its revenues from the field – this is the first revolution that Intel has joined in a large way since the personal computing revolution of the nineties and early 2000s.

Intel’s stock is now jumping about 5% in late trading on the Nasdaq, after before the reports it fell about 2% on the trading day and about 24% in the last month, due to the hot air coming out of the chip stocks. This is a mirror image of last night’s Alphabet reports – in which the search giant revealed that it increased its spending on chips and servers to over 200 billion dollars throughout the year, which led to disappointment on the part of investors and proved that the software giants and the cloud only increase their commitment to purchasing chips.