The CEO of Intel says that the 'insatiable demand' for enough processing power to handle tons of data led it to a big beat on Wall Street expectations (INTC)

Intel CFO Bob Swan

Intel shares rallied more than 6% on Thursday after the chipmaker topped Wall Street expectations for the fourth quarter.
The tech giant got a huge lift from its data center business, which benefited from robust demand processors from the cloud service providers.
CEO Bob Swan said the strong cloud market was being fueled by an "insatiable appetite" for data and the processing power needed to handle it.
The company also posted an upbeat outlook for the current quarter and for the year. Intel said it expects revenue of $19 billion for the current quarter, and $73.5 billion for the current year.
Click here for more BI Prime stories.

Intel's big bet on the market for data center chips appears to be paying off, but the chip giant is embracing a cautious approach to a market known for unexpected ebbs and flows.

Intel shares rallied more than 6% on Thursday after the chipmaker topped Wall Street expectations for the fourth quarter. The tech giant got a huge lift from its data center business which benefited from robust demand processors from the cloud service providers.

CEO Bob Swan said the results were based on a continuously expanding cloud market with an "insatiable appetite" for data and the processing resources needed to handle it.

Revenue for Intel's data center business rose 19% year over year to $7.2 billion. Its PC business edged up by 2% to $10 billion.

That's a good sign for Intel which has pivoted away from a shrinking PC market. The semiconductor giant has focused increasingly on the lucrative and growing market for processors used to power massive cloud infrastructures and corporate data centers.

Analyst Patrick Moorhead of Moor Insights and Strategy said Intel had a "great fourth quarter in spite of increased competition and supply challenges."

He was referring to the challenge posed by Intel archrival AMD, whose new server chips have won high praise, and is expected to take more share from Intel. Intel also has been plagued by production issues that have led to supply constraints.

"The data-centric businesses carried the day," Moorhead told Business Insider. A key reason was the rapid growth of companies building massive cloud platforms, led by Amazon, Microsoft and Google.

Swan said the cloud — specifically, serving mega-providers like Amazon and Microsoft with chips — is becoming a "bigger and bigger part" of its data center business revenue. But the cloud market can be unpredictable, which Intel learned the hard way last year when an unexpected build-out stalled, causing a dip in demand.

That's why Intel is proceeding with caution, Swan said. "They go into digestion mode and the buying patterns slow down," he told analysts on the earnings call. "Hopefully, we're wrong. Hopefully we're conservative."

Outlook is good

But Intel also cheered Wall Street with an upbeat overall outlook for the quarter and the year.

For the first quarter, Intel said it expect a profit of $1.30 a share on revenue of $19 billion. Analysts were expecting a profit of $1.04 a share on revenue of $17.2 billion

For the full year, it sees a profit of $5 a share on revenue of $73.5 billion. Analysts were expecting a profit of $4.61 a share on revenue of $71 billion.

Intel reported a fourth-quarter profit of $6.9 billion, or $1.58 a share, compared with a profit of $5.2 billion, or $1.12 a share for the year-ago period. Revenue rose to $20.2 billion from $18.7 billion. Adjusted profit was $1.52 a share.

Analysts were expecting Intel to report a profit of $1.25 a share on revenue of $19.23 billion.

Got a tip about Intel or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel or send him a secure message through Signal at (510)

Join the conversation about this story »

NOW WATCH: Taylor Swift is the world's highest-paid celebrity. Here's how she makes and spends her $360 million.