Intel posts 25% revenue jump, beats Q3 forecast; capex raised to $20bn on AI boom

Earnings beat

Intel reported second-quarter revenue of $16.13 billion, a 25.4% increase from a year earlier, surpassing the $14.42 billion analysts expected. Adjusted profit was 42 cents per share, double the 21-cent estimate. Adjusted gross margin reached 41.8%, above the 38.8% forecast. The results mark the fastest revenue growth in 15 years, according to the Financial Times. Product revenue hit $15.1 billion, well above the $13.6 billion estimate, while foundry revenue rose 31% to $5.8 billion.

AI is driving unprecedented demand for compute, and as we continue to execute, Intel is well-positioned to capture sustainable growth.

AI-driven demand

The surge was fueled by demand for central processing units used in data centers running agentic AI applications, where autonomous agents perform tasks like coding. Intel's data center and AI business revenue increased 59% to $6.3 billion, exceeding the $5.6 billion estimate. Chief Financial Officer David Zinsner told Reuters that booming demand has caught the company off guard, with orders outstripping its ability to manufacture CPU chips. The shift toward AI agents has driven a resurgence for data center CPUs, and Intel has pointed to greater demand for CPUs needed to run AI applications through inference.

Capital spending boost

Zinsner said Intel raised its 2026 capital expenditure forecast from $18 billion to $20 billion and expects spending to be "up meaningfully next year." The company has signed long-term agreements of three to five years with customers for data center CPUs and specialized XPUs, some containing both chip volume and price commitments and others only volume commitments.

That's signaling the confidence around the growth opportunities for the business.

Zinsner cautioned that such agreements can be renegotiated when conditions change, but said customers "are not signing those unless they have real confidence around what they're going to invest."

Stock reaction

Intel shares fell 2.3% in regular trading Thursday but rose 5% after hours following the report. The stock has declined more than 25% from its record close on June 22 amid a broader chip selloff, though it remains up over 170% for the year. The July slide made it one of the worst S&P 500 performers this month, Bloomberg noted.

Outlook

For the third quarter, Intel forecast revenue between $15.8 billion and $16.8 billion, well above the $15.1 billion consensus. Adjusted profit is expected to be 38 cents per share, compared with estimates of 27 cents. The company's GAAP net income swung to an $11 billion loss due to volatility in shares held in escrow under a U.S. government investment deal, but adjusted net income rose to $2.2 billion. Intel has rebounded from several difficult years after receiving backing from the Trump administration for its costly push to regain its status as America's only world-class chipmaker.