July 24 (Reuters) - Intel's shares rose 6% in premarket trading on Friday after bullish forecasts signaled the AI boom was propelling the chipmaker's long-awaited turnaround.
The company forecast third-quarter revenue above Wall Street expectations and raised this year's capital expenditure estimate to $20 billion from $18 billion.
Intel's improving outlook reflects growing adoption of its data center central processing units (CPUs) by customers building infrastructure for artificial intelligence, as CEO Lip-Bu Tan works to position the company as a broader beneficiary of AI-driven semiconductor demand despite Nvidia's lead in accelerator chips.
"The capex increase not only signals confidence in cash flow upside and demand visibility from long-term agreements for products, but also confidence that Foundry customers are coming (for packaging and 14A wafers)," analysts at Melius Research said.
This month's selloff in global chip stocks has pushed Intel off record highs, but the shares have more than doubled this year, driven by optimism around the company's turnaround efforts.
The strong results prompted at least six analysts to raise their price targets, leaving the median target about 8.8% above the stock's last close, according to data compiled by LSEG.
Tan has spent the past year strengthening Intel's finances, securing backing from the U.S. government and major investors as the chipmaker seeks to play a key role in Washington's push to revive domestic semiconductor manufacturing.
"The aggressive capex raise is a proof point that Intel is likely to see continued customer acquisition as the United States demands more domestic semiconductor manufacturing," D.A. Davidson analysts said.
Demand for data center CPUs has surged alongside the rise of AI agents, with Intel executives noting earlier this year that orders were running ahead of the company's production capacity.
Reporting by Joel Jose in Bengaluru; Editing by Amanda Cooper and Devika Syamnath
Source: Reuters