Intel beat expectations and saw its shares jump 20% after posting first-quarter revenue of $13.6 billion, a year-on-year (YoY) increase of 7%.

It’s a sign the struggling chipmaker might finally be reversing its fortunes, having previously posted declining revenue for five of the last seven quarters.

The strongest growth during the quarter came from Intel’s data center business, which saw a YoY increase of 22%, totaling $5.1 billion, with operating profit for the segment reaching $1.5 billion.

Intel Foundry also saw revenue growth during the quarter, up 16% to $5.4 billion, with the company’s application-specific integrated circuit (ASIC) segment almost doubling YoY and 30% from the previous quarter to just over $1 billion. External foundry revenue was $174 million in the quarter.

Intel is forecasting Q2 revenue of between $13.8 billion and $14.8 billion, above analyst expectations of $13.07 billion for the upcoming quarter.

“Intel is now a very different company than when I first joined over a year ago,” CEO Lip-Bu Tan told investors on the company’s earnings call. “We have taken, and continue to take, deliberate steps to rebuild Intel into a more competitive and more profitable company.”

However, there is still work to be done, with the company posting a $4.28 billion net loss for the quarter, $2.4 billion of which came from Intel Foundry. The chipmaker has also seen many of its executives leave over the last 12 months – most recently, Kevin O’Buckley, former SVP and GM of Intel Foundry Services, left the company to take up a role at Qualcomm.

Furthermore, Tan noted the company was still struggling to meet the increasing customer demand for CPUs.

“There is huge demand," Tan said on the earnings call. "We are working very hard with our team to make sure we deliver, that we meet that demand, but we are still short because the demand keeps increasing from the customers.

"Our foundry, we are working really hard on it. We see more than 7% yield improvement per month, and right now, we are seeing the yield is supposed to be, anticipated the same number in end of the year, so we are way ahead of our schedule."

At the end of Q4, Intel CFO David Zinsner admitted that the company misjudged demand for data center central processing units (CPUs), saying that although Intel would be "shifting as much [capacity] as we can over to the data center,” it was still expecting the global CPU shortage to continue throughout this fiscal year, reaching its “lowest level” in Q1 before improving in Q2 and beyond.

However, while Tan said on the Q1 call that he was “confident” CPUs would continue to drive growth for the company in the years ahead and not just the quarters, Zinsner warned that "constraints and rising prices around key components like memory, wafers, and substrates are driving higher costs that could impact demand for our product at some point in the year."

Deals, deals, deals

Intel has certainly not had a quiet start to the year, signing multiple long-term hardware deals and repurchasing the 49% stake in its Fab 34 in Ireland for $14.2 billion.

February saw the company enter into a “multi-year strategic collaboration” with SambaNova to deliver “high‑performance, cost‑efficient AI inference solutions,” and in April, Google committed to multi-year Intel CPU deployments, and said it would be collaborating with the chipmaker on custom infrastructure processing unit (IPU) developments.

The financial terms or timelines of those deals have not been disclosed.

Intel also announced this month that it was joining Tesla’s $20 billion TeraFab project in Austin, Texas, with Tesla CEO Elon Musk stating on his company’s own Q1 earnings call that the EV company is planning to use Intel’s 14A chip manufacturing process at the facility.

"We are super excited about working with Elon Musk, and we have very regular meetings,” Tan said on Intel’s earnings call. “He and I, we share the same vision that the whole global semiconductor supply did not keep pace with the rapid acceleration in demand. We are really looking forward to working with him in terms of process technology and improve the manufacturing efficiency and move more manufacturing the U.S."