Intel reported stronger-than-expected first-quarter earnings, sending its shares sharply higher and fueling signs of a potential turnaround after years of struggling in the chip market.

Revenue rose 7.2%, driven in part by a 22% jump in its data center business as demand for AI-related CPU processing grows.

The company also issued an upbeat forecast for the next quarter, well above Wall Street estimates, even as it continues to post large net losses.

CEO Lip-Bu Tan said Intel is benefiting from renewed demand for CPUs in AI systems and expanding partnerships, including interest from companies like Google and Elon Musk’s ventures, CNBC has reported.

Despite progress, Intel still faces challenges from manufacturing delays, competition with rivals like Nvidia and TSMC, and the need to improve chip production yields.