The takeaway: There was a degree not way back when Intel was in a lot hassle {that a} takeover of the corporate appeared inevitable. Now, Workforce Blue has turned its enterprise round to the purpose the place it is simply skilled its quickest progress in 15 years, but it surely’s come at a really excessive value.
Intel reported second-quarter income of $16.1 billion, up 25% yr over yr and effectively 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 greatest contributor was its Information 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 Consumer Computing and Bodily AI group grew 13% to $8.9 billion, whereas foundry income elevated 31% to $5.8 billion.
However the AI increase 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 shopper {hardware}. Intel expects PC demand to be weaker than regular in the course of 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 unimaginable 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. Studies that Qualcomm may 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 submit 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 underneath the US authorities’s funding deal. On an adjusted foundation, the corporate made a $2.2 billion revenue.
Intel additionally recorded destructive adjusted free money circulate of $8.4 billion, in contrast with destructive $1.1 billion a yr earlier. Nevertheless, 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 circulate in the course of the quarter.
However, 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 shall be “considerably above” this yr’s degree. The cash will go towards gear, clean-room area, substrates, and increasing manufacturing capability.
Intel will not be alone in seeing booming AI-related progress accompanied by destructive money circulate. Google lately reported its first destructive free money circulate since going public, at $5.9 billion, as annual capital spending heads towards $205 billion. Tesla additionally recorded destructive free money circulate of $1.1 billion whereas getting ready to spend as much as $25 billion this yr.
Intel’s foundry operation continues to battle, shedding $2.1 billion in the course of the quarter and nonetheless missing the key 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 business large it as soon as was.
