- Second-quarter revenue rose 25% to $16.1 billion, while adjusted gross margin reached 41.8% and adjusted earnings were $0.42 per share. [1] - Data Center and AI revenue climbed 59% to $6.3 billion as demand for server CPUs continued to exceed Intel’s available supply. [1][3] - Intel raised its 2026 capital-spending forecast to more than $20 billion and expects spending to increase again in 2027. [2][3] - Intel Foundry generated $5.8 billion of segment revenue, but external customers contributed only $293 million, or about 5%; the unit posted a $2.1 billion operating loss.
[3] Intel delivered $16.1 billion in second-quarter revenue, up 25% from a year earlier, as demand for server processors, higher average selling prices and improved factory output produced the company’s strongest sales growth in more than 15 years. Adjusted earnings of $0.42 per share and a 41.8% adjusted gross margin exceeded Intel’s guidance and Wall Street forecasts.[1][2]
The chipmaker forecast third-quarter revenue of $15.8 billion to $16.8 billion, with adjusted earnings of $0.38 per share and an adjusted gross margin of 42% at the midpoint. Intel shares rose 5.2% in extended trading Thursday, Reuters reported, after having declined more than 25% from their June 22 record close.[1][2]
AI demand is pulling more CPUs into data centers #
Intel’s Data Center and AI unit produced $6.3 billion in revenue, up 59% from a year earlier and 24% sequentially. The division reported $2.5 billion of operating profit, about $1 billion more than in the first quarter, as cloud and enterprise customers bought more Xeon processors for AI infrastructure.[1][3]
Management said businesses it classifies as AI-driven accounted for roughly 70% of company revenue during the quarter. Intel argues that inference and agentic workloads require increasing numbers of general-purpose CPUs to work alongside GPUs and other specialized accelerators. Demand is running ahead of supply, and management said fulfilling existing orders, rather than pursuing near-term server market-share gains, is its immediate priority.[3]
The client and physical AI group also exceeded expectations, with revenue rising 13% year over year to $8.9 billion. Some of that strength came from higher average selling prices and a shift toward more expensive processors rather than unit growth. Intel still expects the overall PC market to decline by a low-double-digit percentage in 2026 as memory shortages and higher component prices weigh on demand.[1][3]
Foundry output improves, but outside sales remain limited #
Intel Foundry reported $5.8 billion in segment revenue, up 31% from a year earlier. Most of that revenue came from manufacturing for Intel’s own product groups: external foundry customers contributed $293 million, about 5% of the total. The division recorded a $2.1 billion operating loss, an improvement of $348 million from the first quarter as higher yields, shorter production cycles and greater factory utilization reduced wafer costs.[1][3]
Output from Intel’s 18A manufacturing process came in about 25% above the company’s target and increased more than 50% from the first quarter. Intel said it has cut the manufacturing cost of its primary Panther Lake processor configuration by roughly half since the start of the year and expects a further 20% reduction during 2026.[3]
Tan also committed Intel to high-volume production of its next-generation 14A process in 2028. That is a firmer position than Intel took last year, when it warned that continued 14A investment depended on securing a major external customer. Intel expects to deliver its 0.9 process design kit in October 2026 and begin risk production in the second half of 2027, but it has not announced the external orders or capacity commitments behind the planned ramp.[2][3]
Tan’s cost reset is becoming a capacity buildout #
Tan became chief executive on March 18, 2025, and moved quickly to flatten Intel’s leadership structure, put major engineering groups under his direct supervision and reduce management layers. Intel announced a roughly 15% workforce reduction in July 2025 and said it had cut the number of management layers by about half.[4][5]
Those changes are visible in the expense base. Adjusted research, development, marketing and administrative spending declined 8% year over year to $4 billion in the second quarter. Intel reported 77,600 core employees at quarter-end, compared with 96,400 a year earlier, although approximately 3,000 of that reduction resulted from the deconsolidation of Altera.[1]
Intel is now increasing investment as customers seek more CPUs, wafers, substrates and advanced packaging. The company raised expected 2026 capital expenditure from $18 billion to more than $20 billion and said spending would increase again in 2027. CFO Dave Zinsner said Intel has signed three- to five-year agreements with some data-center customers, but the company did not disclose how much of its planned capacity is supported by external foundry orders.[2][3]
Intel nevertheless reported an $11 billion GAAP net loss because its income statement included a $13.6 billion mark-to-market charge tied to shares held in escrow for the U.S. Department of Commerce. The charge was recorded outside operating income: Intel generated $1.8 billion of GAAP operating income and $2.2 billion of adjusted net income. The escrowed shares are released as Intel performs work and receives proceeds under the government’s Secure Enclave program.[1][6]
Companies mentioned #
Further sources #
[1] Intel, “Intel Reports Second-Quarter 2026 Financial Results,” July 23, 2026. ↗ [2] Reuters, “Intel forecast crushes estimates as AI boom boosts chip demand; share… ↗
[3] Intel Q2 2026 earnings conference call transcript, July 23, 2026. ↗
[[4] Intel, “Lip-Bu Tan: Steps in the Right Direction,” July 24, 2025. ↗](https://newsroom.intel.com/corporate/lip-bu-tan-steps-in-the-right-direction)
[[5] Intel, CEO and CFO comments for the first-quarter 2025 earnings call, April 24,… ↗](https://download.intel.com/newsroom/2025/corporate/67s2p/Intel-Q12025-Earnings-Call-Comments.pdf)
[[6] Intel filing describing shares issued and held in escrow for the U.S. Departmen… ↗](https://www.intc.com/filings-reports/all-sec-filings/content/0000050863-25-000129/intc-20250822.htm)
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