Chips Pave Way for Tech Recovery

NEW YORK (TheStreet) -- The chip sector is raising expectations of a tech spending rebound, thanks to a flurry of upbeat news from Intel(INTC Quote), Dell(Dell Quote) and Marvell(MRVL Quote).

Tech bellwether Intel raised its third-quarter revenue guidance Friday before market open, predicting sales between $8.8 billion and $9.2 billion, compared to its previous projection of $8.1 billion to $8.9 billion.

Intel's strong guidance came less than 24 hours after PC giant Dell posted better-than-expected second-quarter sales, profit and margins.

Both Intel and Dell shares basked in the warm afterglow of their announcements, climbing 3.95% and 7.45%, respectively, in early trading Friday. The tech giants, however, were not the only companies enjoying a wave of investor confidence.

The Commerce Department said this week that U.S. consumer spending rose 0.2% in July, likely boosted by the government's Cash-for-Clunkers program, and further fueling talk of a recovery.

Marvell shares surged after the chipmaker blew past analysts' estimates in its second-quarter results Thursday, despite a profit plunge.

The Santa Clara, Calif.-based firm is reaping the benefits of a healthier spending climate, pushing its shares up $1.18, or 8.07%, to $15.81.

"We experienced improving momentum throughout the quarter," said Marvell CEO Sehat Sutardja during a conference call late Thursday. "We're encouraged by the amount of order stabilization."

The silicon specialist also grew its sales 23% sequentially, fueling talk of a recovery, and expects revenue from new products to double during the third quarter. Further reflecting its confidence, Marvell issued bullish guidance, predicting third-quarter revenue between $680 million and $730 million, well above analysts' estimate of $647.05 million.

"[Marvell is] back on the bandwagon after great numbers and great guidance," wrote Avi Cohen, managing partner at Avian Securities, in a note released Friday. "[There is] lots of room for upside next year."