Intel Corp. shares rallied in the extended session Thursday after the chip maker’s quarterly results and outlook topped Wall Street estimates with a big beat in data-center sales that pushed revenue over the $20 billion mark for the first time.

Intel INTC, +0.94%  shares surged 7% after hours, following a 0.9% rise in the regular session to close at $63.32. In comparison, the Dow Jones Industrial Average DJIA, -0.09%  declined 0.1 %, the S&P 500 index SPX, +0.11% rose 0.1%, the tech-heavy Nasdaq Composite Index COMP, +0.20%  advanced 0.2%, and the PHLX Semiconductor Index SOX, +0.78%  gained 0.8%.

The company reported fourth-quarter net income of $6.91 billion, or $1.58 a share, compared with $5.2 billion, or $1.12 a share, in the year-ago period. Adjusted earnings were $1.52 a share.

Revenue rose to $20.21 billion, passing the $20 billion mark for the first time, up from $18.66 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $1.25 a share on revenue of $19.23 billion.

Read: How Intel figures in data-center recovery is key

Data-center group, or DCG, revenue rose 19% to $7.2 billion, while analysts expected it to rise 5.2% to $6.39 billion, while Intel’s largest segment — client-computing, the traditional PC group — rose 2% to $10 billion, with analysts expecting a 0.8% decline to $9.75 billion from a year ago.

“Intel had a great Q4 in spite of increased competition and supply challenges,” Patrick Moorhead, principal analyst at Moor Insights & Strategy, told MarketWatch. “The ‘data centric’ businesses carried the day with each business driving double digit growth, except for [field-programmable gate array]s. Even PCs were up, which was a big surprise for me.”

“The biggest thing Intel needs to do to keep this going is to get out it’s next generation 10-nm designs out and in-market,” Moorhead said.

In chip parlance, nanometers, or nm, refers to the size of the transistors that go on a computer chip, with the general rule being that smaller transistors are faster and more efficient in using power. For more than a year, Intel has struggled to roll out its 10-nm chips while Advanced Micro Devices Inc. AMD, +0.54%  has released its 7-nm chips. AMD reports its earnings after the bell on Tuesday.

Intel reported that nonvolatile memory solutions revenue rose 10% to $1.2 billion, while Wall Street expected an 11% rise to $1.23 billion. “Internet of Things,” or IoT, revenue rose 13% to $920 million, compared with an expected 28% rise to $1.05 billion.

Intel expects adjusted earnings of $1.30 a share on revenue of about $19 billion for the first quarter, and $5 a share on revenue of about $73.5 billion for the year. Analysts had forecast earnings of $1.04 a share on revenue of $17.25 billion for the first quarter, and $4.66 a share on revenue of $72.41 billion for the year.

“In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” said Bob Swan, Intel CEO, in a statement. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns.”

Of the 42 analysts who cover Intel, 15 have buy or overweight ratings, 19 have hold ratings and eight have sell or underweight ratings, with an average price target of $59.13.