Intel reported profits of $3 billion in the first quarter, an increase of 45 percent over last year, while revenues climbed 8 percent to $14.8 billion. Internet of Things (IoT) revenue surpassed Wall Street expectations, increasing 11 percent to $721 million, but data center revenue disappointed analysts by falling short of predictions.
The chip-making giant’s Data Center Group grew 6 percent to $4.2 billion, but analysts had expected it to reach $4.4 billion. Intel’s long-term goal for the segment is double-digit growth.
Intel has turned its attention to the Internet of Things and data center segments to counteract continuing PC declines. The company’s data center chips have been a bright spot in recent years.
The lower-than-expected data center results cast a shadow on an otherwise strong financial report. Intel reported record Q1 revenue, coming off record 2016 numbers.
"We continued to grow our company, shipped our disruptive new Optane memory technology, and positioned Intel to lead in new areas like artificial intelligence and autonomous driving,” CEO Brian Krzanich said in a statement.
In March, Intel announced plans to purchase Mobileye, which makes computer vision technology for autonomous driving, for $15.3 billion in cash. Intel has already developed technologies that plot an autonomous car’s path and make real-time driving decisions.
Intel still controls most of the market for modern data center processors, though it has stumbled in markets like smartphone chips due to late entry.
More Segment Results
Intel saw its biggest Q1 gains in memory chip sales, which grew 55 percent to $866 million. Client computing revenue reached $8 billion, an increase of 6 percent over the same period last year.
Security group revenue was down 1 percent to $534 million, while programmable solutions grew 18 percent to $425 million.
Looking ahead, Santa Clara, California-based Intel predicts revenues of $14.4 billion this quarter. The company raised its full-year revenue projection by $500 million, expecting 2017 sales of $60 billion.