Intel investors were a bit "spooked" by the company's lower-than-expected data center numbers, which dragged its stock down 3% Wednesday afternoon.
Intel's betting its future on the growth of its data center business, but it only saw 5% growth year-over-year in the second quarter, well below its 15% growth forecast for the full year.
But Intel CEO Brian Krzanich downplayed any concerns about the slowdown during a call with investors, saying that all signs point to a bounce back during the second half of the year.
Krzanich said the enterprise market is "stabilizing," while the price point for server chips will go up in the second half of the year. He also pointed out that customer signals are indicating the "seasonal buying pattern" kicking back in during the rest of the year.
But more than anything, Krzanich circled back to the staggering amount of data that will be created by all the internet users and connected devices in the long term, which will have to be stored and processed in data centers mostly powered by Intel chips. Intel currently owns over 90% of the data center chip market.
"These guys don't build out their data centers in a linear fashion. They grow, they build out a big chunk of over capacity...then they don't build for a while. These trends in data tell me, no, it's not slowing down over the long term, and what you're really going to see is just the buying patterns and the build outs of various structures that will go up."
Intel stock remained down 3% even after Krzanich tried to ease any concerns around its data center growth. But Patrick Moorhead, principal analyst of Moorhead Insights & Strategy, tells us those concerns may be "overblown" and Intel likely has everything under control.
"I was pretty surprised that shares were down. When it comes to the enterprise markets, and the public cloud, Intel knows deal by deal how to manage them, they're micromanaged at Intel, so they have a very good idea how those are going to come in," he said.