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Updated from 1:03 a.m. EDT with premarket stock price.



) --


(INTC) - Get Intel Corporation Report

blew past Wall Street's estimates in its

third-quarter results

, despite falling profit.

Shares of Intel, which competes with


(AMD) - Get Advanced Micro Devices, Inc. Report


Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report

dipped 9 cents, or 0.4%, to $20.40 in extended trading Tuesday. The stock has risen about 4% to $21.40 as of 4:40 a.m. EDT on Wednesday.

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Citing the impact of an improving economy, Intel posted sales of $9.4 billion, down $828 million on the same period last year, but above Wall Street's projection of $9.04 billion.

The world's largest chipmaker earned 33 cents a share on net income of $1.9 billion, down from 35 cents a share and $2 billion in the same period last year. Analysts surveyed by Thomson Reuters had estimated earnings of 28 cents a share.

"The PC market is recovering nicely," Intel CFO Stacy Smith said during a conference call after market close. Intel's Atom microprocessors generated revenue of $400 million during the quarter, he added, and have now brought in $1 billion this fiscal year.

Despite Intel's revenue beat, Otellini explained that overall enterprise spending remains week. The company's Digital Enterprise Group, for example, brought in revenue of $4.9 billion, down from $5.3 billion in the same period last year. Intel's Mobility Group generated revenue of $4.1 billion, down from $4.7 billion in the same period last year.

"This momentum in the current economic climate, plus our product leadership, gives us confidence about our business prospects going forward," said Intel CEO Paul Otellini, in a statement released after market close.

The company, which has recently been branching out from its core microprocessor business into


, had forecast third-quarter sales between $8.8 billion and $9.2 billion and a gross profit margin between 53% and 55%.

Intel's third-quarter gross profit margin came in at 57.6%.

For the fourth quarter, Intel expects revenue between $9.7 billion and $10.5 billion, well above analysts' estimate of $9.51 billion.

The microprocessor giant is seen as a bellwether for the broader tech sector, and Otellini recently predicted an


in the PC market.

With the launch of Microsoft's

Windows 7

operating system imminent, the company's results could spell good news for semi stocks desperate for a rebound in IT spending.

-- Reported by James Rogers in New York.