Intelreported a profit excluding one-time items that was lower than last year but which blew out analysts' expectations, and the chip maker gave a forecast for current-quarter revenue that also topped analysts' estimates.
Intel reported a profit, excluding one-time items, of 18 cents a share in the second quarter, against 28 cents a share in the same period last year.
Sales in the most recent quarter reached $8 billion, compared with revenue of $9.47 billion last year.
A Thomson Reuters survey of analysts who follow the company predicted Intel's earnings at 8 cents a share on sales of $7.284 billion.
"Basically, very strong numbers for the quarter and guidance is in line with seasonal trends. It's an extremely strong number given the macro economic backdrop," Ashok Kumar, an analyst with Collins Stewart, told Reuters. "Despite those headwinds, the company delivered significant upside to both guidance as well as as expectations. The big unknown is whether it's anything more than inventory replenishment."
Intel shares jumped about 7 percent in late trading Tuesday. The stock finished the regular Nasdaq session down 0.36 percent at $16.77. Get After-Hour Quotes for Intel by clicking here.
The results show that demand for chips is improving. PC builders are ordering more processors, mainly because they've burned through massive amounts of inventory to save money and now have to restock. That doesn't mean the machines they're building are necessarily flying off the shelves.
The No. 2 PC maker, Dell, warned Monday and Tuesday that its sales to businesses remain weak. Dell executives said the U.S. PC market might have hit its bottom, though. Meanwhile, Hewlett-Packard, the world's biggest PC seller, offered a lower-than-expected sales forecast in May.
Intel's chief financial officer, Stacy Smith, said Intel's results reflected "a combination of strengthening end demand and a partial replenishment of the worldwide supply chain."
Intel's third-quarter sales outlook of $8.5 billion, plus or minus $400 million, was significantly better than the average estimate of analysts polled by Thomson Reuters. Analysts projected $7.8 billion in sales.
Including charges, Intel posted a net loss of $398 million, or 7 cents a share, after taking charges related to a $1.45 billion fine imposed by European regulators, which had ruled in May that the company had abused its market position to squeeze out rival Advanced Micro Devices. Intel has said it intends to appeal the ruling.