- Intel’s turnaround gained traction in Q2, with revenue up 25%
- Data Center and AI stole the spotlight, jumping 59%
- Intel still has work to do, especially in foundry, but analysts say the trajectory is encouraging
Intel CEO Lip-Bu Tan’s efforts to turn the company around appear to be paying off, with Q2 revenue surging 25% year on year to $16.1 billion. Tan hailed the result as Intel’s “strongest revenue growth in more than fifteen years.”
Unsurprisingly, the star of the show was Intel’s Data Center and AI division, which saw revenue rise 59% to $6.3 billion and operating income grow from $600 million to $2.5 billion.
“Demand accelerated across cloud and enterprise, as customers increasingly recognize the critical role that CPUs in general – and x86 CPUs in particular – play in the AI infrastructure,” Tan said on its Q2 earnings call. He added Intel’s Xeon 6 system continues to be “one of the fastest ramping products in Intel’s history,” and highlighted the company’s collaboration with chipmaker SambaNova on disaggregated inference technology.
Intel holds a 9% stake in SambaNova. Check out our interview with SambaNova Chief Product and Strategy Officer Abhi Ingle here.
J. Gold Associates Founder Jack Gold wrote in a note to investors that Intel’s data center and AI unit result “shows that AI build-out is not only about GPUs, but increasingly about the accelerated CPUs (Xeon) that Intel is producing, and which they still can't keep up with demand.”
Client Computing and Physical AI revenue increased 13% to $8.9 billion. Intel Foundry grew revenue 30% to $5.8 billion. Even with $2 billion in losses associated with its Foundry business, Intel’s consolidated operating income remained in the black at $1.8 billion, a stark turnaround from an operating loss of $3.2 billion in the year-ago quarter.
“It’s likely to take at least 3-4 more quarters for this business to completely turn around, but this trajectory is encouraging,” Gold wrote. Though revenues could be negatively impacted if the AI demand bubble bursts, Gold noted that investment so far “shows no signs of abating, and I'd expect to see continued profit improvements over the next several quarters.”
Emarketer Senior Analyst Jacob Bourne added in comments to Fierce that Intel also raised its spending outlook, attributing its “bullish outlook” to the data center business results. The open question, he added, is “what the future holds for the foundry business, which lost $2.1 billion and has yet to land the major customers Intel’s strategy depends on."
For its part, Intel seems confident. The company raised its planned capex for 2026 to $20 billion, in what CFO David Zinsner said is a reflection of its confidence in customer demand across all of its business units.
Read more about CPUs for AI and SambaNova:
SambaNova targets AI inference boom with chips built for existing data centers
Red Hat exec: Sovereign AI could drive CPU demand for inference