Intel’s Turnaround Finally Clocks In

Intel’s comeback has been stuck in the development process for years — and after years of manufacturing hope, it manufactured a convincing quarter. The chipmaker reported second-quarter revenue of $16.13 billion, up 25% from a year earlier and far above the roughly $14.42 billion analysts expected. Adjusted net income swung to $2.20 billion from a $441 million loss, while adjusted earnings of $0.42 per share doubled the $0.21 consensus. Adjusted gross margin expanded to 41.8% from 29.7% and topped the 38.8% analysts anticipated. Shares, which closed down 2.3% Thursday at $100.23, were indicated about 6% higher early Friday at roughly $106.25, as investors rewarded Intel’s strongest revenue growth in more than 15 years.

The hottest chips were heading toward AI servers rather than personal computers. Data Center and AI revenue surged 59% to $6.26 billion, nearly $900 million above expectations, as growing use of autonomous AI agents increased demand for the central processors needed to coordinate their workloads. Intel said customer orders continued to outstrip its manufacturing capacity, even after higher factory yields and faster production cycles increased its available volume. Client Computing and Physical AI revenue also climbed 13% to $8.88 billion, as a shift toward higher-priced processors offset lower unit sales.

Intel’s foundry still churned out losses, although the latest quarter reduced their volume considerably. Segment revenue increased 31% to $5.77 billion, while its operating loss narrowed to approximately $2.1 billion from $3.2 billion. The company’s reported bottom line looked much worse than its operations, with a GAAP net loss of $11.03 billion, or $2.16 per share, resulting largely from a $12.53 billion noncash mark-to-market charge on Intel shares held in escrow for the U.S. government under a CHIPS Act agreement. Adjusted free cash flow was negative $8.42 billion, largely because Intel completed a planned $14.2 billion buyout of Apollo’s minority interest in an Irish factory venture, while operating cash flow improved to $7.01 billion from $2.05 billion.

Management expects third-quarter revenue of $15.8 billion to $16.8 billion, comfortably above the $15.1 billion consensus, while its adjusted earnings forecast of $0.38 per share topped the $0.27 analysts anticipated. Booming demand prompted Intel to raise planned 2026 capital spending to $20 billion from $18 billion, with another meaningful increase expected next year. CEO Lip-Bu Tan also said Intel is now fully committed to a high-volume ramp of its next-generation 14A manufacturing process in 2028. Intel has spent years measuring its turnaround in nanometers and promises. AI demand is finally converting those promises into visible revenue and margins.

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