Snap shares surged 28% on Friday after the company surprised Wall Street by showing a profit and reported sales and user numbers that exceeded analysts’ estimates.

The stock climbed $3.15 to close at $14.55, its biggest percentage gain since 2022. Even after the rally, the stock is down 14% for the year due to a 31% plunge in February.

Revenue in the first quarter increased 21% to $1.19 billion from $989 million a year earlier, topping analysts’ estimates for sales of $1.12 billion, according to LSEG.

The company reported adjusted earnings per share of 3 cents, while analysts were expecting a 5-cent loss. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $46 million, compared to analysts’ expectations for a loss of $68 million.

Snap said adjusted EBITDA “exceeded our expectations” and was primarily driven by operating expense discipline, as well as accelerating revenue growth.

Snap has been working to rebuild its advertising business after the digital ad market stumbled in 2022. Its investments are starting to pay off. The company said in its investor letter that revenue growth was primarily driven by improvements in the advertising platform, as well as demand for its direct-response advertising solutions. 

“I think more broadly, we saw a much more robust brand environment, which played out in all of our regions in Q1,” CFO Derek Andersen said on the earnings call.

User growth was also better than expected. Snap reported 422 million daily active users (DAUs) in the first quarter, up 10% year over year and topping the average analyst estimate of 420 million, according to StreetAccount.

In February, Snap announced it would lay off 10% of its global workforce, or around 500 employees. The company said Thursday that headcount and personnel costs will “grow modestly” through the rest of the year. 

Advertising revenue came in at $1.11 billion in the first quarter. Snap’s “Other Revenue” category, which is primarily driven by Snapchat+ subscribers, reached $87 million, an increase of 194% year over year. Snap reported more than 9 million Snapchat+ subscribers for the period.

Though Snap’s growth was its fastest since March 2022, it still fell behind that of Meta, which reported 27% growth in its better-than-expected first-quarter results on Wednesday. Meta shares plunged anyway after the company issued a light forecast and spooked investors with talk of its long-term investments.

For the second quarter, Snap expects to report revenue between $1.23 billion and $1.26 billion, up from the $1.22 billion expected by analysts, according to StreetAccount.

WATCH: Watch CNBC’s full interview with Snap CEO Evan Spiegel

Federal authorities say a “critical safety gap” in Tesla‘s Autopilot system contributed to at least 467 collisions, 13 resulting in fatalities and “many others” resulting in serious injuries.

The findings come from a National Highway Traffic Safety Administration analysis of 956 crashes in which Tesla Autopilot was thought to have been in use. The results of the nearly three-year investigation were published Friday.

Tesla’s Autopilot design has “led to foreseeable misuse and avoidable crashes,” the NHTSA report said. The system did not “sufficiently ensure driver attention and appropriate use.”

The agency also said it was opening a new probe into the effectiveness of a software update Tesla previously issued as part of a recall in December. That update was meant to fix Autopilot defects that NHTSA identified as part of this same investigation.

The voluntary recall via an over-the-air software update covered 2 million Tesla vehicles in the U.S., and was supposed to specifically improve driver monitoring systems in Teslas equipped with Autopilot.

NHTSA suggested in its report Friday that the software update was probably inadequate, since more crashes linked to Autopilot continue to be reported.

In one recent example, a Tesla driver in Snohomish County, Washington, struck and killed a motorcyclist on April 19, according to records obtained by CNBC and NBC News. The driver told police he was using Autopilot at the time of the collision.

The NHTSA findings are the most recent in a series of regulator and watchdog reports that have questioned the safety of Tesla’s Autopilot technology, which the company has promoted as a key differentiator from other car companies.

On its website, Tesla says Autopilot is designed to reduce driver “workload” through advanced cruise control and automatic steering technology.

Tesla has not issued a response to Friday’s NHTSA report and did not respond to a request for comment sent to Tesla’s press inbox, investor relations team and to the company’s vice president of vehicle engineering, Lars Moravy.

Earlier this month, Tesla settled a lawsuit from the family of Walter Huang, an Apple engineer and father of two, who died in a crash when his Tesla Model X with Autopilot features switched on hit a highway barrier. Tesla has sought to seal from public view the terms of the settlement.

In the face of these events, Tesla and CEO Elon Musk signaled this week that they are betting the company’s future on autonomous driving.

“If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,” Musk said on Tesla’s earnings call Tuesday. He added, “We will, and we are.”

Musk has for years promised customers and shareholders that Tesla would be able to turn its existing cars into self-driving vehicles with a software update. However, the company offers only driver assistance systems and has not produced self-driving vehicles to date.

He has also made safety claims about Tesla’s driver assistance systems without allowing third-party review of the company’s data.

For example, in 2021, Elon Musk claimed in a post on social media, “Tesla with Autopilot engaged now approaching 10 times lower chance of accident than average vehicle.”

Philip Koopman, an automotive safety researcher and Carnegie Mellon University associate professor of computer engineering, said he views Tesla’s marketing and claims as “autonowashing.” He also said in response to NHTSA’s report that he hopes Tesla will take the agency’s concerns seriously moving forward.

“People are dying due to misplaced confidence in Tesla Autopilot capabilities. Even simple steps could improve safety,” Koopman said. “Tesla could automatically restrict Autopilot use to intended roads based on map data already in the vehicle. Tesla could improve monitoring so drivers can’t routinely become absorbed in their cellphones while Autopilot is in use.”

— NBC’s Robert Wile contributed to this report.

Intel’s long-awaited turnaround looks farther away than ever after the company reported dismal first-quarter earnings. Investors pushed the stock down 10% on Friday to their lowest level of the year.

Although Intel’s revenue is no longer shrinking and the company remains the biggest maker of processors that power PCs and laptops, sales in the first quarter trailed estimates. Intel also gave a soft forecast for the second quarter, suggesting weak demand.

It was a tough showing for CEO Pat Gelsinger, who’s early in his fourth year at the helm.

But Intel’s problems are decades in the making.

Before Gelsinger returned to the company in 2021, the company, once synonymous with “Silicon Valley,” had lost its edge in semiconductor manufacturing to overseas rivals like Taiwan Semiconductor Manufacturing Company. Now, in a high-risk quest, it’s spending billions per quarter to regain ground.

“Job number one was to accelerate our efforts to close the technology gap that was created by over a decade of under-investment,” Gelsinger told investors on Thursday. He said the company is still on track to catch up by 2026.

Investors remain skeptical. Intel is the worst-performing tech stock in the S&P 500 this year, down 37%. Meanwhile, the two best-performing stocks in the index are chipmaker Nvidia and Super Micro Computer, which has been boosted by surging demand for Nvidia-based AI servers.

Intel, long the most valuable U.S. chipmaker, is now one-sixteenth the size of Nvidia by market cap. It’s also smaller than Qualcomm, Broadcom, Texas Instruments, and AMD. For decades, it was the largest semiconductor company in the world by sales, but suffered seven straight quarters of revenue declines recently, and was passed by Nvidia last year.

Gelsinger is betting the company on a risky business model change. Not only will Intel make its own branded processors, but it will act as a factory for other chip companies that outsource their manufacturing — a group of companies that includes Nvidia, Apple, and Qualcomm. Its success acquiring customers will depend on Intel regaining “process leadership,” as the company calls it.

Other semiconductor companies would like an alternative to TSMC so they don’t have to rely on a single supplier. U.S. politicians including President Biden call Intel an American chip champion and say the company is strategically an important part of the U.S. processor supply chain.

“Intel is a big iconic semiconductor company which has been the leader for many years,” said Nicholas Brathwaite, managing partner at Celesta Capital, which invests in semiconductor companies. “And I think it’s a company that is worth trying to save, and they have to come back to competitiveness.”

But the company isn’t doing itself any favors.

“I think everyone has been hearing them say the next quarter will be better for two, three years now,” said Counterpoint analyst Akshara Bassi.

Intel has fumbled the ball for years. It missed the mobile chip boom with the unveiling of the iPhone in 2007. It’s been largely on the sidelines of the artificial intelligence craze while companies like Meta, Microsoft and Google order as many Nvidia chips as they can.

Here’s how Intel ended up where it is today.

The iPhone could have had an Intel chip inside. When Apple developed the first iPhone, then-CEO Steve Jobs visited former Intel CEO Paul Otellini, according to Walter Isaacson’s 2011 biography “Steve Jobs.”

They discussed whether Intel should power the iPhone, which had not been released yet, Jobs and Otellini told Isaacson. When the iPhone was first revealed, it was marketed as a phone that ran the Apple Mac operating system. It would’ve made sense to use Intel chips, which ran on the best desktops at the time, including Apple’s Macs.

Jobs said that Apple passed on Intel’s chips because the company was “slow” and Apple didn’t want the same chips to be sold to its competitors. Otellini said that while the tie-up would have made sense, the two companies couldn’t agree on a price or who owned the intellectual property, according to Isaacson.

The deal never happened. Apple chose Samsung chips when the iPhone launched in 2007. Apple bought PA Semi in 2008 and introduced its first homegrown iPhone chip in 2010.

Within five years, Apple started shipping hundreds of millions of iPhones. Overall smartphone shipments — including Android phones designed to compete with Apple — surpassed PC shipments in 2010.

Nearly every modern smartphone uses an Arm-based chip instead of Intel’s x86 technology which was created for PCs in 1981 and is still in use.

Arm chips built by Apple and Qualcomm consume less power than Intel’s processors, making them more desirable for small devices like phones that run on batteries.

Arm-based chips quickly improved due to the enormous manufacturing volumes and the demands of an industry that needs new chips every year with faster performance and fresh features. Apple started placing huge orders with TSMC to build its iPhone chips, starting with the A8 in 2014. It gave TSMC the cash to upgrade its manufacturing equipment annually and surpass Intel.

By the end of the decade, some benchmarks had the fastest phone processors rivaling Intel’s PC chips for some tasks while consuming far less power. Around 2017, mobile chips from Apple and Qualcomm started adding AI parts to their chips called neural processing units, another advancement over Intel’s PC processors. The first Intel-based laptop with an NPU shipped late last year.

Intel has since lost share in its core PC chip business to chips that grew out of the mobile revolution.

Apple stopped using Intel in its PCs in 2020. Macs now use Arm-based chips based on the ones used in iPhones. Some of the first mainstream Windows laptops with Arm-based chips are coming out later this year. Low-cost laptops running Google ChromeOS are increasingly using Arm, too.

“Intel lost a big chunk of their market share because of Apple, which is about 10% of the market,” Gartner analyst Mikako Kitagawa said.

Intel made efforts to break into smartphones. It released an x86-based mobile chip called Atom that was used in the 2012 Asus Zenphone. But it never sold well and the product line was dead by 2015.

Intel’s mobile stumble set the stage for a lost decade.

Processors get faster with more transistors. Each one allows them to do more calculations. The original Intel microprocessor from 1971, the 4004, had about 2,000 transistors. Now Intel’s chips have billions.

Semiconductor companies fit more transistors on chips by shrinking them. The size of the transistor represents the “process node.” Smaller numbers are better.

The original 4004 used a 10-micrometer process. Now, TSMC’s best chips use a 3-nanometer process. Intel is currently at 7-nanometers. Nanometers are 1,000 times smaller than micrometers.

Engineers, especially at Intel, took pride in regularly delivering smaller transistors. Brathwaite, who worked at Intel in the 1980s, said Intel’s process engineers were the company’s “crown jewels.” People in the technology industry relied on “Moore’s Law,” coined by Intel co-founder Gordon Moore, that said the amount of computing power would double and become cheaper at predictable intervals, roughly every two years.

Moore’s Law meant that Intel’s software partners, like Microsoft, could count on the next generation of PCs or servers being more powerful than the current generation.

The expectation of continuous improvement at Intel was so strong that it even had a nickname: “tick-tock development.” Every two years, Intel would release a chip on a new process (tick) and in the subsequent year, it would refine its design and technology (tock.)

In 2015, under CEO Brian Krzanich, it became clear that Intel’s 10nm process was delayed, and that the company would continue shipping its most important PC and server processors using its 14nm process for longer than the normal two years. The “tick-tock” process had added an extra tock by the time the 14nm chips shipped in 2017. Intel officials today say that the issue was underinvestment, specifically on EUV lithography machines made by ASML, which TSMC enthusiastically embraced.

The delays compounded at Intel. The company missed its deadlines for the next process, 7nm — eventually revealing the issue in a bullet point in the small print in a 2020 earnings release, causing the stock to plunge, and clearing the way for Gelsinger, a former Intel engineer, to take over.

While Intel was struggling to keep its legendary pace, AMD, Intel’s historic rival for server and PC chips, took advantage.

AMD is a “fabless” chip designer. It designs its chips in California, and has TSMC or GlobalFoundries manufacture them. TSMC didn’t have the same issues with 10nm or 7nm, and that meant that AMD’s chips were competitive or better than Intel’s in the latter half of the decade, especially for certain tasks.

AMD, which barely had market share in server CPUs a decade ago, started taking its slice. AMD made over 20% of server CPUs sold in 2022, and shipments grew 62% that year, according to an estimate from CounterPoint Research last year. AMD surpassed Intel’s market cap the same year.

AI-oriented GPU-based servers sometimes pair as many as eight Nvidia GPUs to one Intel CPU. In older servers, the Intel CPU was almost always the most expensive and important part. In a GPU-based server, it’s Nvidia’s chips.

Nvidia recently announced a version of its latest “Blackwell” GPU that cuts Intel out entirely. Two Nvidia B100 GPUs are paired with one Arm-based processor.

Almost all Nvidia GPUs used for AI are made by TSMC in Taiwan, using leading-edge techniques to produce the most advanced chip.

Intel doesn’t have a GPU competitor to Nvidia’s AI accelerators, but it has an AI chip called Gaudi 3. Intel started focusing on AI for servers in 2018 when it bought Habana Labs, whose technology became the basis for the Gaudi chips. The chip is manufactured on a 5nm process, which Intel doesn’t have, so the company relies on an external foundry.

Intel says it expects $500 million in Gaudi 3 sales this year, mostly in the second half. For comparison, AMD expects about $2 billion in annual AI chip revenue. Meanwhile, analysts polled by FactSet expect Nvidia’s data center business — its AI GPUs — to account for $57 billion in sales during the second half of the year.

Still, Intel sees an opportunity and has recently been talking up a different AI story — it could eventually be the American producer of AI chips, maybe even for Nvidia.

The U.S. government is subsidizing a massive Intel fab outside of Columbus, Ohio, as part of $8.5 billion in loans and grants toward U.S. chipmaking. Gelsinger said last month that the plant will offer leading-edge manufacturing when it comes online in 2028, and will make AI chips — perhaps those of Intel’s rivals, Gelsinger said on a call with reporters in March.

It hasn’t been easy. Gelsinger referred to its goal to regain leadership as a “death march” in 2022.

Now, the march is starting to reach its destination, and Intel said on Thursday that it’s still on track to catch up by 2026. At that point, TSMC will be shipping 2nm chips. Intel said it will begin producing its “18A” process, equivalent to 2nm, by 2025.

It hasn’t been cheap. Intel reported a $2.5 billion operating loss in its foundry division on $4.4 billion in mostly internal sales. The sums represent the vast investments Intel is making in facilities and tools to make more advanced chips.

“Setup costs are high and that’s why there’s so much cash burn,” said Bassi, the CounterPoint analyst. “Running a foundry is a capital-intensive business. That’s why most of the competitors are fabless, they are more than happy to outsource it to TSMC.”

Intel last month reported a $7 billion operating loss in its foundry in 2023.

“We have a lot of these investments to catch up flowing through the P&L,” Gelsinger told CNBC’s Jon Fortt on Thursday. “But basically, what we expect in ’24 is the trough.”

Not many companies have officially signed up to use Intel’s fabs. Microsoft has said it will use them to manufacture its server chips. Intel says it’s already booked $15 billion in contracts with external companies for the service.

Intel will help its own business and enable better performance in its products if it regains the lead in making the smallest transistors. If that happens, Intel will be back, as Gelsinger is fond of saying.

On Thursday, Gelsinger said demand was high for this year’s forthcoming server chips using Intel 3, or its 3nm process, and that it could win customers who had defected to competitors.

“We’re rebuilding customer trust,” Gelsinger said on Thursday. “They’re looking at us now saying ‘Oh, Intel is back.'”

WATCH: Intel’s traditional business hasn’t grown fast enough