By Max A. Cherney and Arsheeya Bajwa

(Reuters) -Intel expressed optimism on Thursday about the future of its PC and server businesses, forecasting current-quarter revenue above estimates but warning that it had "a lot of work to do."

The chipmaker's shares jumped more than 7% in extended trading, paring back bigger gains shortly after it had published its results.

The company has largely missed out on a boom in investments in speedy, advanced AI chips for data centers as businesses double down on adopting generative AI technology - a market dominated by Nvidia, followed by rival AMD.

Intel reported third-quarter revenues above analysts' estimates, but also posted a massive net loss as a result of impairment and restructuring charges.

In an interview with Reuters, Intel finance chief David Zinsner said the company was "making progress" on its profitability but that it had "a lot of work to do" to achieve the targets it had set.

Intel reported a third-quarter net loss of $16.6 billion, excluding losses attributable to certain non-controlling interests. That compared with a net profit attributable to Intel of about $300 million in the year-earlier period.

"Let’s be honest, expectations were quite low for the company and they beat those lowered expectations" said Ryan Detrick, chief market strategist of Carson Group.

As one of the largest makers of PC chips, Intel has benefited as the rollout of on-device AI features and a fresh Windows update cycle renewed demand for PCs after a years-long slump, helping the company surpass Wall Street's low expectations.

Revenue in Intel's Client Computing Group - which includes its PC chips for desktop and laptop computers - fell 7% to $7.3 billion. Analysts had estimated the client segment would shrink to $7.38 billion.

The company expects revenue of $13.3 billion to $14.3 billion for the current quarter, the midpoint of which is above analysts' average estimate of $13.66 billion, according to data compiled by LSEG.

Analysts also expect demand for traditional server chips made by Intel - its mainstay data-center semiconductors - to pick up in the second half of 2024 after several quarters of soft demand as investment is funneled to AI chips.

For the data center segment, which includes AI chips, Intel said revenue rose 9% to $3.3 billion, above analysts' estimates of $3.16 billion.

However, Intel's share of the PC and server CPU market is consistently threatened by AMD, which now boasts a market valuation larger than that of Intel and is also the closest competitor to market leader Nvidia in AI graphics processors.