Intel Surges on Strong AI Chip Demand and Upbeat Outlook

Intel has experienced a notable increase in its stock value following the release of strong second-quarter financial results and a confident third-quarter forecast. Revenue for the quarter reached $16.1 billion, a 25% increase compared to the previous year and exceeding market estimates. Non-GAAP earnings per share also showed a significant improvement, turning a loss into a profit.

Under CEO Lip-Bu Tan, who took the helm in March 2025, Intel has undergone a cultural transformation, moving from a loss-making entity to a profitable, growing business. This resurgence is significantly boosted by the high demand for AI infrastructure, particularly Intel's x86 CPUs for agentic AI tasks and its advanced packaging solutions.

The company's foundry business, which allows for in-house AI CPU production and manufacturing for external clients, is strategically positioning Intel to compete without sole reliance on TSMC. Despite no major foundry customer announcements yet, deals are anticipated as Intel showcases its manufacturing capabilities.

Intel now anticipates capital expenditures to surpass $20 billion in 2026, an increase of approximately $3 billion, driven by strong customer demand signals and investments in its U.S. network. These are viewed as strategic investments to meet the demand for domestically produced chips, mitigating geopolitical risks.

In the client computing segment, AI PC revenues grew sequentially, and edge deployments now represent about 10% of segment revenue, supported by higher average selling prices. The data center and AI segment was a standout performer, with substantial year-over-year increases in revenue and operating income due to strong hyperscaler and enterprise demand.

Looking ahead, Intel projects third-quarter revenue between $15.8 billion and $16.8 billion. The company anticipates GAAP gross margins around 41.0% and Non-GAAP gross margins near 42.0%, indicating an improvement from the prior year. Non-GAAP earnings per share are forecasted to be 38 cents, a significant increase from the consensus estimate.