Intel stock bumps up with revenue prediction increase

SAN FRANCISCO — Intel stock got a bump Friday after the company announced third-quarter revenue would be above its previous outlook.

The chip maker said it now expects third-quarter revenue to be $15.6 billion, plus or minus $300 million. That compares to the previous range of $14.9 billion, plus or minus $500 million.

Intel stock (INTC) rose 2.5% Friday morning on the news.

The revenue increase is mainly coming from replenishment of PC supply chain inventory and some signs of improving PC demand, Intel said.

"Fundamentally, we think this positive pre-announcement is a good first step to the PC story stabilizing at INTC, which could help INTC grow total revenues, driven by tailwinds from DCG (Data Center Group), IoT (Internet of Things), and memory," RBC Capital Markets analyst Amit Daryanani wrote in a note to investors Friday. He raised his price target to $38 from $36.

Shipments of PCs, and therefore the chips that power them, have been waning in recent years as the market has moved to tablets and smart phones.

However they ticked upward slightly over expectations in the second quarter, with worldwide PC shipments totaling 62.4 million units. That represented a year-on-year decline of 4.5% but still beat the forecast of a 7.4% decline by roughly 3%, according to the International Data Corporation.

IDC cautioned that the less than worse decline was likely due to inventory replenishment.

"Unfortunately, these types of supply-side drivers don't necessarily reflect a change in consumer purchases. Even PC channels remain fairly cautious following challenges over the past year, so the results are not likely to raise the forecast," the company said in a release.