Demand for AI computing power detonates performance, Intel's second quarter revenue hits the largest increase in fifteen years
Benefiting from the huge demand for data center CPU chips due to the development of artificial intelligence (AI), chip giant Intel (Intel) is ushering in a long-lost explosive growth. On July 23, local time, Intel announced its second quarter financial report as of the end of June 2026. Intel's second-quarter revenue reached $16.1 billion, a year-on-year increase of 25%, nearly $2 billion higher than analysts' consensus estimate of $14.4 billion. The year-on-year growth rate hit a new high since the third quarter of 2011. Adjusted earnings per share (EPS), excluding one-time charges, were 42 cents, double the 21 cents expected. Adjusted net profit was US$2.2 billion, turning into a profit compared with a loss in the same period last year. Many of Intel's core indicators not only far exceeded the company's own guidance, but also significantly exceeded Wall Street expectations. "Artificial intelligence is driving unprecedented computing demands. As we continue to execute our established strategies, Intel is well-positioned to capture sustainable growth with its CPU, ASIC, advanced packaging and wafer foundry." Intel CEO Chen Liwu said that the second quarter performance represents the strongest revenue growth in more than fifteen years, thanks to faster speed, a stronger sense of responsibility and a customer-centric philosophy. Intel's guidance for the third quarter once again exceeded market consensus. The company expects third-quarter revenue to be between $15.8 billion and $16.8 billion, with non-GAAP (non-GAAP) gross margin of 42% and earnings per share of $0.38 based on the midline of $16.3 billion. Analysts had expected revenue and earnings per share of $15.1 billion and $0.28 respectively. After the results were announced, Intel's stock price surged more than 13% in after-hours trading. AI business plays a leading role, with both data center and foundry growing rapidly. Judging from the financial report data, AI-related businesses have become the absolute engine of Intel’s growth. The financial report shows that AI-driven business revenue, including data center chips, increased by more than 70% year-on-year, contributing nearly 70% of total revenue. The performance of the data center and AI (DCAI) business was particularly impressive, with revenue reaching US$6.3 billion, a 59% year-on-year increase and a 24% month-on-month increase, setting the strongest quarterly growth rate for the server business in history. Intel said that customers are increasingly recognizing the critical role of x86 general-purpose CPUs in AI infrastructure, and the Xeon 6 series processors have become one of the fastest-shipping products in the company's history. The wafer foundry business (Intel Foundry), which is regarded as a key position in Intel's transformation, has also made progress. Revenue for the quarter was US$5.8 billion, a year-on-year increase of 31%. Although operating losses still amounted to US$2.1 billion, thanks to the unexpected increase in the yield rate of Intel's 18A advanced process and the expansion of production capacity, the loss has narrowed by US$348 million month-on-month. Capital expenditures will exceed US$20 billion in 2026 Faced with surging demand for AI computing power, Intel is expanding production capacity with unprecedented intensity despite continued tight supply. Intel Chief Financial Officer Dave Zinsner said that due to strong customer demand signals, the company has significantly raised its full-year capital expenditure forecast for 2026 to more than US$20 billion, and expects capital expenditures in 2027 to be significantly higher than 2026 levels, with most of them invested in the domestic manufacturing network in the United States. Zinsner revealed: "From 2021 to 2026, our total capital expenditures on U.S. tools and factory space will be close to $100 billion, far exceeding any other semiconductor company during the same period." Funds will be mainly used to purchase tool equipment, accelerate the construction of clean workshops, and lock in substrate and memory supply to support the growing demand for foundry and own products. Advanced manufacturing processes are steadily advancing, and 14A risk production is on the horizon. In terms of technology roadmap, Intel also gave positive signals. Chen Liwu said that the current output of Intel's 18A process has exceeded expectations by 25%, with a month-on-month growth of more than 50%. The yield improvement trend is good, and it has supported a number of new products including Panther Lake to enter mass production. At the same time, the enhanced version of the 18A-P node has entered the risk production stage.
The development progress of the next-generation Intel 14A process, which has attracted more attention, is in line with expectations, and both defect density and transistor performance are better than the performance of the 18A process in the same period. Version 0.5 process design kit (PDK) has been completed, and version 0.9 is scheduled to be delivered to external customers in October 2026. Intel confirmed that 14A will usher in risk production of internal products in the second half of 2027, and has promised in the second quarter to fully launch high-volume mass production in 2028. Chen Liwu made it clear on the conference call that Intel is "fully committed" to mass production using its cutting-edge 14A manufacturing process in 2028. He also said that seeing the increasing momentum of customer participation in the 14A process, "I am increasingly confident that 14A will become a very competitive process." Intel's foundry business has also been effectively settled by many heavyweight customers. Intel has successfully won an order from Tesla and will manufacture its next-generation AI chips for Musk's "Terafab" project. In addition, in April this year, US President Trump revealed that Apple had agreed to have its processors manufactured by Intel. However, neither party has officially confirmed the deal so far, but market expectations have increased. But Intel also pointed out that the entire industry is facing one of the most serious supply bottlenecks in history, involving logic chips, memory and substrates. The PC market is affected by rising memory prices and supply constraints, and consumer demand is expected to show weak seasonality in the second half of the year. The demand outlook for server CPUs has further strengthened, and the industry is expected to achieve strong double-digit percentage shipment growth this year and next, and continue to 2028. Chen Liwu has full confidence in Intel's future. He said: "Intel is the only company that can design, manufacture and build full-stack computing solutions from general-purpose CPUs, GPUs to dedicated ASICs and CPUs optimized for AI agents. Our strategy is clear and the pace of execution is accelerating."
The development progress of the next-generation Intel 14A process, which has attracted more attention, is in line with expectations, and both defect density and transistor performance are better than the performance of the 18A process in the same period. Version 0.5 process design kit (PDK) has been completed, and version 0.9 is scheduled to be delivered to external customers in October 2026. Intel confirmed that 14A will usher in risk production of internal products in the second half of 2027, and has promised in the second quarter to fully launch high-volume mass production in 2028. Chen Liwu made it clear on the conference call that Intel is "fully committed" to mass production using its cutting-edge 14A manufacturing process in 2028. He also said that seeing the increasing momentum of customer participation in the 14A process, "I am increasingly confident that 14A will become a very competitive process." Intel's foundry business has also been effectively settled by many heavyweight customers. Intel has successfully won an order from Tesla and will manufacture its next-generation AI chips for Musk's "Terafab" project. In addition, in April this year, US President Trump revealed that Apple had agreed to have its processors manufactured by Intel. However, neither party has officially confirmed the deal so far, but market expectations have increased. But Intel also pointed out that the entire industry is facing one of the most serious supply bottlenecks in history, involving logic chips, memory and substrates. The PC market is affected by rising memory prices and supply constraints, and consumer demand is expected to show weak seasonality in the second half of the year. The demand outlook for server CPUs has further strengthened, and the industry is expected to achieve strong double-digit percentage shipment growth this year and next, and continue to 2028. Chen Liwu has full confidence in Intel's future. He said: "Intel is the only company that can design, manufacture and build full-stack computing solutions from general-purpose CPUs, GPUs to dedicated ASICs and CPUs optimized for AI agents. Our strategy is clear and the pace of execution is accelerating."