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A day after big jobs announcement, Intel warns of lower profit margins in a key business

Intel told investors on Thursday that it expects lower margins in its data center business, a day after announcing a multi-billion dollar investment at the White House.

At its investor meeting on Thursday, Intel's VP of its data center group, Diane Bryant, said its data center profit margins would drop over time to the low-to-mid 40 percent range,down from their historical norms between 45 and 50 percent. Shares briefly fell nearly 2 percent in heavy volume, before recovering, last down about 1.5 percent.

The company's data center business sells products to enterprises and cloud computing providers to use in their data centers. It's been a critical contributor to Intel's growth: in 2016, data center revenue amounted to $17.2 billion, up 8 percent from the previous year; the only faster-growing segment was its much smaller Internet-of-Things segment, where revenues grew 16 percent to $2.6 billion.

Intel CEO Brian Krzanich demonstrates a working SoFIA Intel® Atom™ processor-based smartphone
Source: Intel
Intel CEO Brian Krzanich demonstrates a working SoFIA Intel® Atom™ processor-based smartphone

Intel said it expects overall operating margins to grow faster than revenue.

The margin adjustment comes just a day after Intel CEO Brian Krzanich appeared at the White House, where he announced the company would invest $7 billion and hire 3,000 workers in long-planned Arizona plant.

Krzanich told investors that growth in its data center group was a priority for 2017, and that Intel was a "data company," though it is usually thought of as a chip-maker.

— Reporting by CNBC's Josh Lipton and Megan Hawkins