Intel exceeded everyone's expectations yesterday when it reported a whopping $2.3 billion profit for its fourth quarter despite paying out a $1.25 billion settlement to Advanced Micro Devices.

Last year the tech giant pulled in just $234 million, making the 28 percent year-over-year rise the largest in 10 years.

The tech giant's earnings were buoyed by a dramatic increase in PC shipments, which brought in $7.76 billion in sales. Altogether, Intel's sales hit $10.6 billion in the fourth quarter, a 29 percent increase over last year.

Aside from its PC business, Intel also makes chips for netbooks and wirelessly-enabled consumer electronics. The business group that handles the majority of those segments brought in $412 million. Netbook sales were included in Intel's PC group results.

Intel's earnings were boosted by holiday sales, but its optimistic 2010 forecast points to the possibility of a rebound for the battered PC market. Intel expects to pull in sales between $9.3 billion and $10.1 billion for the current quarter.

"We have seen a return of consumer demand and replenishment to normal inventory levels after the precipitous demand drop at the end of 2008 and the beginning of 2009," said Intel CFO Stacy Smith in a statement. "The fourth quarter was consistent with this trend, with unit shipments seasonally up in the typically higher fourth quarter."