Intel Corp Posts Strongest Revenue Growth in 15 Years

What happened

Intel reported second-quarter revenue of $16.1 billion, a 25% increase from $12.9 billion a year earlier. The company posted non-GAAP earnings of $0.42 per share, nearly double Wall Street expectations, while reporting a GAAP net loss of $11 billion largely due to a $12.5 billion mark-to-market adjustment on escrowed shares tied to a U.S. government agreement. Data Center and AI revenue climbed 59% to $6.3 billion, while Client Computing and Physical AI revenue rose 13% to $8.9 billion. Intel Foundry revenue increased 31% to $5.8 billion, though much of that reflects internal manufacturing services. The company generated $7 billion in operating cash flow and raised its 2025 capital spending forecast from $18 billion to $20 billion, with further increases expected in 2026. Intel also announced its Intel 14A process node will enter high-volume production in 2028, ahead of the original 2029 schedule, with risk production starting in the second half of 2027. The company launched Xeon 6+, its first server processor made with Intel 18A technology, and moved 18A-P into risk production during the quarter.

Why it matters

The results mark a turning point for Intel after years of manufacturing delays, market share losses, and exclusion from the Dow Jones Industrial Average. Data center and AI revenue growth of 59% shows Intel is regaining traction in a category dominated by Nvidia, while the $20 billion capital spending increase signals confidence in sustained AI demand. Multi-year customer agreements with volume commitments help secure future foundry utilization, though CFO David Zinsner noted a share sale is 'not out of the question' to fund expansion. The accelerated 14A timeline and strong 18A output demonstrate execution progress under CEO Lip-Bu Tan, who attributed performance to 'greater speed, accountability, and customer focus.' Intel's ability to meet demand and improve factory yields directly affects its competitiveness against both chip designers and foundry rivals like TSMC.

Bigger picture

Intel's recovery comes as AI infrastructure spending accelerates across cloud providers and enterprises, driving demand for CPUs, ASICs, and custom silicon. The company faces intensifying competition from Nvidia's planned Vera CPU and in-house Arm-based chips from Amazon and Alphabet. Intel's foundry strategy aims to capture third-party manufacturing revenue, but the business remains unprofitable, losing $2.1 billion in the quarter, and has yet to land the major customers its model requires. The U.S. government's 9.9% stake and multi-billion-dollar subsidies reflect national interest in domestic semiconductor manufacturing. Intel's increased capital spending aligns with broader industry trends, as chipmakers race to expand capacity for AI workloads, though higher spending pressures near-term free cash flow and raises questions about funding sustainability.

What to watch

Investors should monitor whether Intel secures major external foundry customers for 14A and 18A nodes, particularly in high-margin AI and data center segments. The company's ability to finance expanded capital spending without dilutive share sales or increased debt will be critical, given $30 billion in cash and a $10 billion credit line. Watch for updates on customer adoption of Xeon 6+ and Panther Lake processors, as well as progress on multi-year volume agreements that support factory utilization. Intel's competitive positioning against Nvidia in AI accelerators and Arm-based alternatives from hyperscalers will shape long-term market share. Any renegotiation of customer contracts or changes to government support could alter Intel's foundry outlook and cash flow trajectory.