On Thursday Eastern Time, Intel (INTC) released a second-quarter earnings report after the market close that far exceeded market expectations, while the third-quarter guidance it issued simultaneously was also significantly higher than analysts’ estimates. This earnings report represents a critical victory in Intel’s transformation process, marking the beginning of substantial tangible results from its multi-year revival strategy. At an inflection point where the AI industry’s focus is shifting from model training to large-scale application deployment, Intel has reestablished its technological authority in its core markets, driven by explosive growth in demand for data center CPUs.
For the second fiscal quarter ended June 27, Intel achieved revenue of $16.13 billion, representing a substantial year-over-year increase of 25.4%, marking the strongest quarterly revenue growth rate since 2011. Adjusted earnings per share came in at $0.42, and adjusted gross margin reached 41.8%, an improvement of 12 percentage points from the same period last year. All three metrics significantly exceeded market consensus expectations of $14.42 billion, $0.21, and 38.8%, respectively. Company management stated that this marks the seventh consecutive quarter of results exceeding financial guidance, with demand across all business segments consistently outpacing growing supply. For the third quarter, Intel expects revenue to reach $15.8 billion to $16.8 billion, with adjusted earnings per share projected at $0.38, compared to average analyst estimates of $15.1 billion and $0.27, respectively. Driven by this positive news, Intel’s stock price surged more than 13% in after-hours trading.
The biggest highlight of this earnings report is that, as the AI industry’s focus shifts from training large models to the large-scale deployment of “Agentic AI” capable of autonomously executing tasks, demand for general-purpose CPUs has experienced an explosion. In the second quarter, Intel’s Data Center and AI business segment generated revenue of $6.3 billion, a year-over-year surge of 59%, far exceeding market expectations of $5.37 billion. Chief Executive Officer Lip-Bu Tan stated that data center CPU demand is taking off and has already surpassed the company’s steadily increasing supply capacity. He revealed that second-quarter server CPU year-over-year growth set an all-time record, and the Xeon 6 product line is currently one of the fastest-ramping products in the company’s history.
In the foundry business segment, which Chief Executive Officer Lip-Bu Tan has been vigorously promoting, Intel Foundry Services generated second-quarter revenue of $5.8 billion, a year-over-year increase of 31%, exceeding analyst expectations. Regarding advanced process nodes, Tan explicitly stated that the company has “fully committed” to high-volume production using its most cutting-edge 14A manufacturing process in 2028, and noted that customer engagement for this process is continuously strengthening. Behind this confidence lies the securing of major clients; Intel has successfully won an order from Tesla (TSLA) to manufacture next-generation AI chips for Musk’s “Terafab” project. Additionally, there is widespread market speculation that Apple (AAPL) has also agreed to have its processors manufactured by Intel.
In the personal computer business segment, quarterly revenue reached $8.9 billion, exceeding market expectations. Although PC chip shipments declined year-over-year, average selling prices increased significantly, reflecting the company’s strategic shift to voluntarily scale back in the entry-level market and focus on high-end devices. Since assuming office, Tan has actively improved the company’s financial health and successfully brought in strategic investments from the federal government, Nvidia (NVDA), and SoftBank, among others. Analysts believe that this earnings report has sent positive signals, and the company’s recent strong momentum will provide support for improvements in long-term fundamentals. If Intel can convert its data center chip shortage into sustainable revenue growth and improve the economic model of its foundry business, its stock price still has room for further revaluation.
