Intel reported a stronger-than-expected second quarter as accelerating investment in AI infrastructure lifted demand for its processors, while the company increased manufacturing spending and reaffirmed its strategy to regain semiconductor leadership.
The chipmaker posted adjusted earnings of 42 cents per share on revenue of $16.1 billion, comfortably exceeding analyst expectations of roughly 21 to 22 cents per share on revenue of about $14.4 billion. Intel also projected third-quarter revenue between $15.8 billion and $16.8 billion, well ahead of Wall Street forecasts, demonstrating that enterprise and hyperscale investment in AI infrastructure remains strong.
CEO Lip-Bu Tan attributed the performance to continued demand for AI compute, noting that enterprises and cloud providers continue expanding infrastructure to support sophisticated AI workloads. While GPUs remain central to AI training, Intel is benefiting from renewed demand for CPUs as companies deploy larger AI clusters that require powerful server CPUs alongside accelerators.
Strong Results in Data Center and AI Business
One of the strongest growth areas was Intel’s data center and AI business, which generated approximately $6.3 billion in quarterly revenue, significantly above analyst expectations and representing roughly 59% year-over-year growth. The company’s client computing business also performed well, with revenue reaching nearly $8.9 billion as Intel shifted its product mix toward higher-value PC processors rather than lower-priced entry-level chips.
Intel executives said the rapid adoption of agentic AI has become an important driver of demand. Because agentic AI systems execute multi-step tasks autonomously, they create heavier compute requirements across data centers. Earlier this year, customer demand for server CPUs exceeded Intel’s manufacturing capacity, prompting the company to expand production plans.
Reflecting that confidence, Intel raised its capital expenditure forecast for this year from $18 billion to $20 billion and indicated spending will increase again next year. Much of the investment will support factory tooling and manufacturing expansion as Intel prepares high-volume production of its next-generation 14A manufacturing process, currently targeted for 2028.
Intel also disclosed that it has signed multiple long-term agreements covering data center CPUs and XPUs. Several contracts include multi-year volume commitments, while others also establish pricing agreements, providing greater visibility into future demand while allowing the company to better manage manufacturing investments.
The company’s foundry business also showed continued progress. Quarterly foundry revenue reached approximately $5.8 billion, and Intel touted growing customer engagement for its advanced manufacturing services. Tesla selected Intel’s forthcoming 14A process for its Terafab AI chip project, and the foundry operation also recently secured Fortinet as a customer using an earlier manufacturing node.
Despite the earnings strength, investors remain cautious following a volatile month for chip stocks. Intel shares had fallen sharply from recent record highs, though they rebounded after earnings. Capital spending increases announced by hyperscalers suggest investment in AI data centers remains resilient, supporting demand for Intel’s product line.
Analysts generally responded positively to Intel’s results, raising earnings estimates and price targets as they pointed to expanding AI infrastructure spending and improving foundry execution as further support for Intel’s turnaround strategy.
