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Intel shares shoot up on strong profit

Chip maker Intel has surprised many Wall Street analysts by posting second-quarter profits of $2.8 billion (£1.7 billion) and also predicting this profits surge was set to continue for the rest of the year.

Commenting on the profits announcement which boosted company stock by 4 per cent, Stacy Smith, Intel's chief financial officer, said "It was a good quarter representing financial growth and solid momentum as we approach the second half of the year."

During recent months, Intel's shares have traded at a 10-year high and the Santa Clara company believes this reversal of fortunes shows the personal computer industry has stabilised and is about to enter a recovery phase. CEO Brian Krzanich has reported increased demand from companies planning to upgrade ageing PCs, and anticipates this will persist throughout 2014.

As one of the global tech industry's leading lights, Intel's financial reports are seen as an indicator of the well-being of the entire sector. With the latest report showing profits up by 45 per cent, and PC sales to business up 6 per cent, many analysts are now predicting that the pattern of slowing PC sales over recent years is nearly over.

Interestingly, recent market-research on sales of tablet computers – conducted by the NPD group – found that the year-on-year total unit shipments declined by 3 million during the first quarter of 2014, which would seem to support market trends.

Showing some reservation, William Kreher, analyst for Edward Jones, commented “We are encouraged by the improved results, as PCs appear to be in a state of growth following two years of decline. But visibility on the long-term health of the traditional PC market appears limited and Intel's competitive positioning in tablets remains weak.”