Intel on Monday raised its third-quarter revenue forecast and said gross margins would be at the high end of its target range, citing stronger-than-expected global demand for computing products.
The news underscored recent investor confidence in technology stocks, which have emerged as a safe haven amid troubles in the U.S. credit and mortgage markets.
Shares of Intel, the world's largest microchip company, were up 0.75 percent at $25.66, after rising as much as 2.9 percent earlier on the Nasdaq. The stock has risen about 25 percent this year, whereas chief rival Advanced Micro Devices has fallen more than 35 percent.
Princeton Tech Research analyst Paul Leming said Intel's bullish forecast suggests the personal computer market has fared well in recent weeks despite concerns about consumer confidence due to troubles in the credit and housing markets.
"A portion of this certainly is market share gains momentum continuing to move over to Intel, and, secondarily, I think this has some positive things to say about the state of the PC market in the important back-to-school season," he said.
Intel raised its forecast for third-quarter revenue to between $9.4 billion and $9.8 billion, from its previous range of $9.0 billion to $9.6 billion.
Analysts on average had expected revenue to be about $9.38 billion, according to Reuters Estimates.
Intel, which is scheduled to report its third-quarter results on October 16, also said it expects its gross margin in the quarter to be in the upper half of its previous range of "52 percent plus or minus a couple of points."
Intel's gross margin had missed its target in the second quarter, coming in at 46.9 percent instead of its forecast of 48 percent.
The announcement came on the same day AMD introduced its next-generation microprocessor, code-named Barcelona, in a long-awaited bid to win market share from Intel.
AMD shares were up 1.11 percent at $12.75 on the New York Stock Exchange.
Intel has regained ground against its smaller rival in the last two years as it has introduced its own new processor with what it calls a quad-core design, a chip that has four central processing engines.
Separately, traders in Germany said there was market talk that AMD was planning to bid for Infineon AG's Qimonda AG memory-chip affiliate.
One trader said AMD plans to offer $16.95 for each share of Qimonda; the stock was up 2.45 percent to $12.96 on the New York Stock Exchange. Infineon, Qimonda and AMD's German unit declined to comment on the market talk. Infineon holds 86 percent of Qimonda.
The Princeton Tech analyst said he did not think AMD would want to buy Qimonda.
"Not only does it make no sense to me, it would very much be an outright negative to see AMD move into what is the low end from the quality, margin and capital intensity (positions)," Mr. Leming said.