Intel CEO Brian Krzanich's strategy delivered an earnings surprise in the second quarter. Source: Intel.

Intel (NASDAQ:INTC) just reported results for the second quarter of 2014. Encouraged by the report, Intel investors lifted the stock more than 4% in after-hours trading, setting new multi-year highs in the process.

The semiconductor titan saw sales rise 8% year over year to $13.8 billion. GAAP earnings rose 41% to $0.55 per diluted share.

The reported revenue fell in the upper half of Intel's updated guidance range. 64.5% gross margins were a 4.9 point sequential increase and 6.2 points year-over-year, and also exceeded the midpoint of Intel's mid-quarter guidance update.

The results also topped analyst estimates on both the top and bottom lines.

Although the data center group showed the strongest growth among Intel's divisions with a 19% year-over-year revenue boost, management pointed to a successful strategy of reaching into new markets.

"With the ramp of our Baytrail SoC family, we have expanded into new segments such as Chrome-based systems, and we are on track to meet our 40 million unit tablet goal," said Intel CEO Brian Krzanich in a prepared statement.

The company collected $5.5 billion in cash from operations. Free cash flows rose 35% year-over-year to $2.7 billion.

Management resolved to return more cash to shareholders, but did not promise any dividend increases today. Instead, Intel will continue to execute a generous share buyback program, which retired $2 billion worth of shares in the second quarter. This should double to $4 billion in the third quarter, rising share prices notwithstanding.

Anders Bylund owns shares of Intel. The Motley Fool recommends and owns shares of Intel. Try any of our Foolish newsletter services free for 30 days.

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