When Brian Krzanich succeeded Paul Otellini as CEO four-and-a-half years ago, Intel (NASDAQ: INTC) was struggling. The problem then, which has eased but still concerns some pundits even today, was Intel's reliance on what was already seen as a dying PC market. The concerns were warranted, and thankfully for Intel shareholders, Krzanich wasted no time pointing the chip king in new directions.
Intel still derives the majority of its revenue from PC offerings, but that's changing with each passing quarter. Now, the self-proclaimed "data center first" provider has become a leader in cloud data centers, the Internet of Things (IoT), cutting-edge memory solutions, and artificial intelligence (AI). After years of struggling, Intel is finally enjoying the fruits of its labor.
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Dawn of a new day
Wasn't long ago a quarter of little to no growth in Intel's client computing group -- home of its PC solutions -- would have been cause for alarm. But as Intel demonstrated last quarter, that's no longer a problem. The $8.9 billion in revenue generated from PCs in the third quarter was flat year over year.
Despite the relatively so-so revenue from PCs, Intel shares are up 13% since sharing yet another record-breaking quarter Oct. 26. Intel's solid performance the last couple of months speaks volumes as to why 2017 was a year to remember. PCs or no PCs, Intel's $16.1 billion in total revenue was still a 6% increase compared to 2016.
The better news is how Intel was able to post such a strong quarter. Stagnant PC sales were more than made up for by record growth of 15% in Intel's data-centric units, which is a culmination of multiple segments. Data center group revenue alone of $$4.9 billion last quarter was not only a 7% jump year over year, it was yet another record.
Not to be outdone, IoT sales rose 23% to a record $849 million, and Intel's memory solutions group soared 37% to $891 million to, you guessed it, another record-breaking quarter. Including the programmable solutions division's revenue of $469 million, 44% of Intel's total sales are now non-PC related. Better still, that percentage continues to climb each quarter.
Cutting expenses is another initiative instituted by Krzanich, and Intel is delivering there, too. Last quarter's $4.9 billion in operating expenses was down 10.5% year over year, which helped boost earnings 36% to a record-breaking $0.94 a share.
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Bring on 2018
Intel's hardly alone in delivering industry-leading, AI-ready data center solutions. NVIDIA (NASDAQ: NVDA) is a relative upstart, but its data-centric offerings are helping to drive its own record quarterly results. Last quarter's $2.64 billion in revenue was up 32% compared to fiscal 2017's third quarter. Founder and CEO Jensen Huang cited NVIDIA's new TensorRT AI data center platform as a key driver of growth, both last quarter and in the years ahead.