Investing.com -- Intel reported its strongest quarterly revenue growth in more than 15 years on Thursday, driven by surging demand for AI computing and improved manufacturing execution, as the chipmaker said it would step up investments in production capacity to meet expected growth in its products and foundry businesses.

Second-quarter revenue rose 25% from a year earlier to $16.1 billion, while adjusted earnings came in at $0.42 per share. On a GAAP basis, Intel posted a loss of $2.16 per share, largely reflecting non-operating charges, including mark-to-market losses related to escrowed shares. The company generated $7.0 billion in cash from operations during the quarter.

The results underscores Intel's turnaround efforts gaining traction under CEO Lip-Bu Tan as booming AI demand boosts both its processor and foundry businesses. Strong growth in its data center segment, improving manufacturing yields and plans to increase investment in capacity underscore the company's push to regain competitiveness against rivals while capitalizing on rising demand for AI infrastructure.

Chief Executive Lip-Bu Tan said artificial intelligence is creating "unprecedented demand for compute," positioning Intel to benefit across its CPU business, ASICs, advanced packaging and foundry operations. Chief Financial Officer Dave Zinsner said the company exceeded its financial guidance on stronger demand, higher factory yields and improved execution, adding that Intel would "meaningfully" increase spending on equipment, clean-room space and substrates to support expected growth this year and next.

Growth was led by Intel's Data Center and AI division, where revenue jumped 59% year over year to $6.3 billion. Revenue from the Client Computing and Physical AI Group increased 13% to $8.9 billion, while Intel Foundry revenue climbed 31% to $5.8 billion.

For the third quarter, Intel forecast revenue of $15.8 billion to $16.8 billion, GAAP earnings per share of $0.31 and adjusted earnings per share of $0.38.

This is a developing story, please check back for updates