Editor丨Su Yang, Tencent Technology
Intel is gradually entering a strong recovery cycle.
On July 23, local time in the United States, Intel announced its financial performance for the second quarter of 2026 ending in June. Among them,revenue was $16.1 billion, a year-on-year increase of 25%. This growth rate is the highest since the third quarter of 2011. In comparison, analysts surveyed by the London Stock Exchange Group (LSEG) had an average expectation of $14.42 billion.
According to US Generally Accepted Accounting Principles (GAAP), Intel recorded a net loss of $11 billion in the second quarter, with a loss per share of $2.16. However, this massive loss is related to the 10% stake held in trust by the US government, which does not affect the company’s actual cash flow and does not reflect the true performance of its main business.
Main financial data for Intel in the second quarter
Under Non-GAAP standards, Intel achieveda net profit of $2.2 billion, with earnings per share of $0.42, compared to a net loss of $400 million and loss per share of $0.10 in the same period last year. Analysts had previously expected earnings per share of only $0.21. It is worth noting that since turning profitable in the third quarter of 2025, Intel hasachieved profitability for four consecutive quarters, with profits gradually expanding.
The recovery of profitability is also reflected in the gross margin.
Under Non-GAAP, the gross margin was 41.8%, a significant increase of 12.1 percentage points compared to 29.7% in the same period last year. Intel's Chief Financial OfficerDavid Zinsner emphasized that the improvement in gross margin is due to economies of scale brought about by higher revenue, as well as the sale of chips with higher profit margins and better pricing.
After a series of positive signals were announced, Intel's stock price rose about 11% in after-hours trading.
01
Price increases drive 59% growth in data center revenue
The biggest highlight of the financial report is undoubtedly the data center business.
In Q2 2026, Intel's Data Center and AI Division (DCAI) achieved revenue of $6.3 billion, a year-on-year increase of 59%, far exceeding the overall growth rate of the company and easily surpassing the analyst expectations of $5.6 billion.
“AI is driving unprecedented demand for computing power. As we continue to execute our established strategy, Intel is well-positioned in CPUs, ASICs, advanced packaging, and a massive foundry network, helping us seize sustainable growth opportunities,” said CEOChen Liwu in a statement.
More notably, the heat of market demand has reached a level of “sweet troubles.” Chen Liwu revealed: “In thedata center field, CPU demand is taking off, and demand is exceeding our increasingly growing supply capacity.”
It is this imbalance between supply and demand that gives Intel long-awaited pricing power. Zinsner added: “From a pricing perspective, the situation is better than we expected.”
In theChinese market, the price of some server CPU products has increased by more than 10% month-on-month, and the cumulative increase since the beginning of 2026 has exceeded 40%. Foreign media reported that Intel and AMD are actively discussing long-term agreements with Chinese server clients—locking in purchase quantities without locking in prices, some coverage periods could last more than two years.
Intel disclosed in its financial report that the companycurrently has finalized 10 such long-term agreements, and admitted that customer demand has exceeded current production capacity, putting the company in a state of limited supply.
Compared to the strong momentum of the data center business, the client business appears somewhat stable. The client computing and physical AI division (CCPG), which includes PC business, achieved revenue of $8.9 billion, a year-on-year increase of 13%.
Zinsner stated that due to the impact of memory shortages, it is expected that PC sales will remain flat in the third quarter.
02
Foundry business accelerates: Revenue grows by 31%, welcoming its first named client
Intel's other major strategic pillar—the foundry business achieved revenue of $5.8 billion in the second quarter, a year-on-year increase of 31%. However, most of its revenue still comes from providing manufacturing services for Intel's own products, with a significant amount offset internally. The financial report shows that this business is still in an operating loss state during the period.
Intel foundry recovery accelerates: Q2 revenue $5.8 billion, losses narrowed to $2.1 billion
Regarding the18A yield, Intel remains optimistic.
In May, Chen Liwu revealed at the 54th Global Technology, Media and Telecom Conference hosted by JPMorgan Chase that Intel's 18A process has supported the mass production phase of the code-named Panther Lake Core Ultra 3 series processors, withyields increasing at a rate of about 7% per month, exceeding the company's internal expectations. At the same time, the data center processor Xeon 6+ has also adopted the 18A process for mass production.
Additionally, the more advanced Intel 18A-P has also entered the risk production phase on schedule. Intel has even begun using ASML's high numerical aperture EUV lithography machines to prepare for mass production of the “graphical layer” of transistors forPanther Lake processors.
In expanding external customers, Intel achieved a historic breakthrough this quarter. Cybersecurity company Fortinet announced a strategic partnership with Intel to leverage its design, packaging, and manufacturing capabilities to develop Fortinet security processors. This is the first named client publicly disclosed in Intel's foundry business.
At the same time, market rumors about Apple's cooperation with Intel in building factories have also garnered attention. Although US President Trump publicly stated in June that Apple had agreed to collaborate with Intel to design and produce chips in the United States, neither company has confirmed this.
Bernstein analysts speculate that if the cooperation is real, the initial focus may be on low-volume, low-risk low-end PC chips, more for proof of concept, and while the short-term revenue contribution may be limited, the symbolic significance is enormous.
Zinsner mentioned in an interview after the financial report about the prospects of the foundry business that Intel has “gained a lot of customer preferences” in advanced chip packaging products, and thisbusiness has accumulated a “large backlog of orders.” He also revealed that the most advanced 14A process technology is still under planned development and is expected to enter mass production in 2028.
In a broader industrial cooperation landscape, Intel expanded its long-term strategic partnership with Google Cloud, aiming to extend AI capabilities to all employees of the company and drive an internally AI-driven transformation. At the same time, it established strategic cooperation with Foxconn, Siemens, Hitachi, and other companies to jointly develop industry-specific AI and computing solutions powered by Intel processors and dedicated chips.
In light of the fundamental shift in the supply and demand landscape of the CPU market, AMD CEO Lisa Su has recently upgraded the 2030 CPU market size forecast from the previous $120 billion to $220 billion, citing strong demand brought by intelligent workload. This echoes Intel's current judgment of supply shortages.
However, after the stock price soared, some cautious voices have begun to emerge in the market.
Grizzle Investment Management portfolio manager Thomas George pointed out that Intel's current expected price-to-earnings ratio is about 74 times, far higher than its 10-year average (22 times), and also higher than its competitors like NVIDIA and Broadcom, “this is a stock that the market has already run ahead on, at least in terms of valuation.”
03
Capital expenditure raised to $20 billion, fueling growth for the future
To convert customers into growth, Intel has decided to decisively increase investments.
The company announced it willraise its full-year capital expenditure plan for 2026 from $18 billion to $20 billion. Zinsner stated that the previously relatively conservative expenditure plan has changed, and the company is now committed to increasing its budget and expects expenditures for 2027 to further increase to support anticipated growth in products and foundry business next year.
In terms of specific investment actions, Intel announced that it willinvest approximately $5.7 billion to expand the manufacturing capacity for the Xeon 6 and next-generation Xeon processors based on Intel 3 process. At the same time, Intel has also expanded its production capacity at its facility in Packer Park, California, to enhance mask manufacturing capabilities to support the development and manufacturing of current and future leading process technologies.
“We had a strong performance in the second quarter, benefiting from robust demand and improved execution, with revenue exceeding our financial guidance,” Zinsner stated. “AI-driven computing demand continues to strengthen, and to support expected growth in products and foundry business this year and next, we are significantly increasing investments in equipment, clean room space, and substrates.”
Meanwhile, Intel's guidance for the third quarter is also quite optimistic.
The company expectsthird-quarterrevenue to be between $15.8 billion and $16.8 billion, significantly higher than analysts' expectations of $15.1 billion; Non-GAAP earnings per share are expected to be $0.38, also above analysts' expectations of $0.27; gross margin is expected to remain around 42%.
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