Intel on Thursday said quarterly revenue and profit forecasts would exceed analyst estimates, prompting a 5.2% gain in the stock in after-hours trading and spurring the company to raise planned spending as the data center buildout for artificial intelligence accelerates demand for central processing units.
The company projected third-quarter revenue in a range of $15.8 billion to $16.8 billion, above analysts' average estimate of $15.1 billion, according to LSEG data. Intel also forecast adjusted earnings of $0.38 per share for the period, versus the $0.27 per-share consensus.
Results and margins
For the quarter ended June 27, Intel reported revenue of $16.13 billion, a 25.4% increase year over year, and adjusted earnings of $0.42 per share. Those results compared with analyst estimates of $14.42 billion in revenue and $0.21 in adjusted earnings. Adjusted gross margin came in at 41.8%, ahead of expectations of 38.8%.
Executives highlighted a strong performance from the data center and AI business, which generated $6.26 billion in second-quarter revenue versus an estimated $5.37 billion. The laptop and desktop segment recorded $8.88 billion in sales, outpacing a $7.89 billion estimate, as the company shifted its product mix away from lower-cost entry-level chips toward higher-end devices. Intel said unit volumes fell in that segment while average selling prices rose.
CEO: 14A production and strategic priorities
Chief Executive Lip-Bu Tan told analysts on the conference call that developments in the second quarter prompted Intel to become "fully committed" to high-volume production of chips built on its forthcoming 14A manufacturing technology in 2028. The 14A node had been under question last year after Intel said it might need to abandon the technology if it could not secure a major customer, a move that would have curbed U.S. competitiveness in leading-edge process technology.
"I’m pleased to see the increasing momentum on customer engagements for Intel 14A, and I’m increasingly confident that the 14A will be a highly competitive process," Tan said.
Capex, balance sheet and contractual commitments
Chief Financial Officer David Zinsner told Reuters that the surge in demand has led Intel to lift its capital spending estimate for the year from $18 billion to $20 billion. He added that spending is expected to be "up meaningfully next year" as the company scales to meet customer needs.
Zinsner said Intel has inked long-term agreements for data center CPUs and specialized XPUs with durations ranging from three to five years. Some of those contracts contain both volume and price commitments, while others include only volume commitments. He cautioned that Intel will preserve spending discipline and noted that such deals can be renegotiated if conditions shift.
On the balance sheet, Zinsner reported about $30 billion in cash and a $10 billion line of credit. He did not rule out the possibility of a share sale, though none is currently authorized. "I wouldn’t dismiss the possibility that we would do that. But no specific plans at this point," he said.
Agentic AI and CPU demand
Company executives and market observers pointed to the rise of "agentic AI" - autonomous software agents that perform tasks such as coding on behalf of users - as a primary driver of renewed demand for data center CPUs. Intel's leadership said the scale of CPU orders earlier in the year outstripped the company's manufacturing capacity.
Shay Boloor, chief market strategist at Futurum Group, said the stock could continue to re-rate higher if Intel is able to translate the current data center shortage into sustained revenue growth, improve foundry economics and secure external customers to validate the next stage of its manufacturing turnaround.
Foundry business traction and customer wins
Intel's contract manufacturing, or foundry, business generated $5.77 billion in second-quarter sales, above estimates of $5.55 billion. The unit announced that it secured Tesla as a customer for its next-generation 14A process, supporting Tesla's "Terafab" AI chip initiative. The company also saw elevated expectations in April after an announcement by President Donald Trump that Apple had agreed to have Intel make processors, a deal that neither company has publicly confirmed.
"There have been lingering questions ever since Lip-Bu Tan took over, and it put a cloud of uncertainty around the foundry business," said Bob O’Donnell, president and chief analyst of TECHnalysis Research. "All those clouds are now removed."
Market reaction and peer moves
Intel's after-hours rally followed the earnings and guidance beat. The share price had fallen more than 25% from a record close on June 22 in the wake of a broader selloff in chip stocks, but remained more than 170% higher year to date.
In extended trading following Intel's announcement, rival chipmakers Arm Holdings and Advanced Micro Devices were up 2.6% and 1.2% respectively.
Outlook and monitoring points
Investors are expected to closely track Intel's data center and foundry operations as key indicators of whether the company's strategic pivot will produce sustainable revenue and margin improvement. Analysts and market strategists say conversion of the present data center demand into ongoing growth, validation of 14A through external customers, and improved foundry economics will be critical to the turnaround.
For now, Intel's combination of better-than-expected quarterly performance, higher margin, raised capital spending plans and new customer commitments has given the company a renewed boost as it seeks to compete with rivals in the market for AI chips.