# Intel cuts jobs in its fastest-growing division two days before Q2 earnings > Source: > Published: 2026-07-22 00:31:48+00:00 *Intel confirmed layoffs in its Data Center and AI Group on July 21, just 48 hours before its Q2 earnings call, even as the unit posted $5.05 billion in revenue last quarter, up 22% year-over-year.* There's a particular kind of confidence required to cut staff from your strongest business right before you report to Wall Street. Lip-Bu Tan has that confidence. Intel's CEO confirmed fresh layoffs in the company's Data Center and AI Group on July 21, a Monday, with Q2 results due Wednesday morning. The market didn't flinch. Intel shares jumped 8.6% and are now up more than 317% over the past year. Investors, it turns out, are perfectly happy to see people go. The exact number of positions being eliminated hasn't been disclosed. What's clear is the direction: Tan is restructuring toward margin and focus, not headcount and scale. Intel told Tom's Hardware the moves are part of a strategy to become a "more focused and efficient company." That phrase has appeared in a lot of tech press releases over the past two years. Here it might actually mean something, because Tan is cutting into units that are growing, not shrinking. The Data Center and AI Group is Intel's best-performing segment. It covers server CPUs, AI chips, and data center architecture. According to Intel's Q1 2026 earnings report published in April, revenue hit $5.05 billion for the quarter, against $4.14 billion a year earlier. That's real growth. AMD's equivalent segment grew faster, at 57% year-over-year to $5.8 billion, but Intel's numbers aren't the problem here. The problem, if you're Tan, is that volume growth without margin discipline is how you end up with Pat Gelsinger's Intel: a company spending furiously across too many fronts, missing execution targets, and slowly losing ground to rivals who are leaner and faster. Gelsinger left in March 2025. What Tan inherited was a company that had expanded aggressively and was still bleeding. The 15% global headcount reduction he announced was designed to stop that bleed. More than 5,000 U.S. employees were cut through 2025, concentrated in California, Oregon, Arizona, and Texas. Extending those cuts into the Data Center and AI Group now signals something more deliberate than a one-time cleanup. Tan isn't protecting his fastest grower from restructuring pain. He's applying the same margin logic everywhere, which suggests he'd rather Intel hold a profitable share of the data center market than chase volume against Nvidia's GPU dominance and AMD's aggressive CPU pricing. Frankly, ceding ground in AI chip volume to Nvidia isn't really a choice anymore. Nvidia owns that market. The question for Intel is whether it can carve out a profitable position in CPU-driven AI inference, in custom silicon through its foundry, and in agentic workloads where its chips have a genuine story to tell. That's where Tan's comments on the Q1 earnings call pointed. "The next wave of AI will bring intelligence closer to the end user," he said, citing a shift from foundational models toward inference and agentic computing as the demand driver for Intel's CPUs and advanced packaging. ## What Wednesday's call actually needs to answer Intel guided Q2 revenue to a range of $13.8 billion to $14.8 billion, with non-GAAP gross margin of 39% and, notably, the first GAAP-positive EPS guidance since Q2 2024. Wall Street consensus sits at about $14.45 billion in revenue and $0.22 in adjusted earnings per share. Those are achievable numbers. They're not what investors will be focused on. The harder questions are structural. How deep do the Data Center and AI Group cuts actually go, and does Tan have a clear line between trimming inefficiency and damaging capability? Intel Foundry posted $5.4 billion in revenue in Q1, up 20% sequentially, driven by EUV wafer volume and growth in 18A. That 18A node, which attracted manufacturing interest from Microsoft and Qualcomm, is the core of the turnaround thesis. Any sign of slippage there, in yield, in schedule, or in customer commitments, would matter far more than one quarter of EPS outperformance. Intel declined to comment on the specific scope of the latest layoffs. That silence will end Wednesday morning. The market has priced in a successful turnaround with considerable enthusiasm, with shares up more than 270% in the first half of 2026 alone. That's a lot of confidence sitting on a very tight execution window. Tan has earned some of it. 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