The takeaway: There was some extent not way back when Intel was in a lot hassle {that a} takeover of the corporate appeared inevitable. Now, Staff Blue has turned its enterprise round to the purpose the place it is simply skilled its quickest progress in 15 years, nevertheless it’s come at a really excessive price.
Intel reported second-quarter income of $16.1 billion, up 25% yr over yr and nicely forward of Wall Avenue’s expectations. Adjusted earnings reached $0.42 per share, virtually double analysts’ forecasts, whereas the corporate expects current-quarter gross sales of between $15.8 billion and $16.8 billion.
As with so many tech giants, Intel’s largest contributor was its Knowledge Heart and AI division. Income from the unit jumped 59% to $6.3 billion as demand for CPUs used alongside AI accelerators continued to surge. The Shopper Computing and Bodily AI group grew 13% to $8.9 billion, whereas foundry income elevated 31% to $5.8 billion.
However the AI growth can also be creating issues for Intel’s conventional PC enterprise. Reminiscence producers have redirected capability towards high-margin data-centre merchandise, contributing to the well-documented shortages and rising costs for client {hardware}. Intel expects PC demand to be weaker than ordinary through the second half of 2026 and the market to say no by a low-double-digit proportion for the total yr.
The outcomes mark an unbelievable flip round in fortunes in comparison with latest years, when Intel’s server CPU shipments had fallen to a 14-year low. The corporate recorded an $18.8 billion annual web loss in 2024, its first since 1986, and the foundry division misplaced greater than $13 billion. Stories that Qualcomm might purchase Intel and that TSMC may take management of its manufacturing operations now not sounded far-fetched – even our latest ‘AMD to purchase Intel‘ April Fools’ joke was plausible sufficient to persuade lots of people.
However the newest outcomes got here with caveats. Intel did put up an $11 billion GAAP web loss, although this was primarily on account of a $12.5 billion mark-to-market cost linked to shares held in escrow below the US authorities’s funding deal. On an adjusted foundation, the corporate made a $2.2 billion revenue.
Intel additionally recorded damaging adjusted free money movement of $8.4 billion, in contrast with damaging $1.1 billion a yr earlier. Nonetheless, the determine was closely affected by a $12.2 billion web outflow associated to companion contributions and $617 million in finance lease funds. The underlying enterprise generated $7 billion in working money movement through the quarter.
Nonetheless, Intel is about to spend significantly extra. It raised its 2026 capital expenditure forecast from $18 billion to greater than $20 billion and warned that subsequent yr’s complete will likely be “considerably above” this yr’s stage. The cash will go towards tools, clean-room house, substrates, and increasing manufacturing capability.
Intel is just not alone in seeing booming AI-related progress accompanied by damaging money movement. Google not too long ago reported its first damaging free money movement since going public, at $5.9 billion, as annual capital spending heads towards $205 billion. Tesla additionally recorded damaging free money movement of $1.1 billion whereas making ready to spend as much as $25 billion this yr.
Intel’s foundry operation continues to battle, dropping $2.1 billion through the quarter and nonetheless missing the most important exterior clients wanted to justify its large investments. However after years of delays, layoffs, shrinking market share, and questions on its very survival, CEO Lip-Bu Tan’s “New Intel” is lastly starting to resemble the trade big it as soon as was.
