Intel Posts Fastest Revenue Growth in Nearly 15 Years on AI Boom. But The Stock Still Fell
Intel just delivered its strongest quarterly revenue growth in nearly 15 years, beating Wall Street expectations as surging demand for artificial intelligence infrastructure fueled sales of its data center processors. Yet despite the upbeat results and stronger-than-expected guidance, investors sent the company’s shares lower following the earnings report.
The semiconductor giant reported second-quarter revenue of $16.1 billion, well above analysts’ expectations of $14.42 billion. Adjusted earnings came in at 42 cents per share, nearly double the consensus estimate of 21 cents per share. The stock fell more than 6% on Friday at 3:01 p.m. ET.
The results marked Intel’s fastest quarterly revenue growth since 2011, with revenue climbing 25% year over year, thanks to the AI spending boom that continues to reshape the semiconductor industry.
“AI is driving unprecedented demand for compute,” Intel CEO Lip-Bu Tan said in a statement. “As we continue to execute, Intel is well-positioned to capture sustainable growth across our CPU franchise.”
Although Intel shares initially rose in after-hours trading following Thursday’s report, the rally quickly faded. According to CNBC, the stock declined during Friday’s session, extending a difficult month in which shares have fallen about 28% despite remaining up more than 170% for the year after an 84% gain in 2025.
The company’s dramatic rise over the past two years has been aided by renewed investor optimism, as well as the U.S. government’s acquisition of a 10% stake in Intel last year as part of efforts to strengthen domestic semiconductor manufacturing.
Intel also issued an optimistic forecast for the current quarter. The company expects adjusted earnings of 38 cents per share on revenue between $15.8 billion and $16.8 billion, comfortably ahead of analysts’ expectations for 27 cents per share in earnings and $15.1 billion in revenue.
The biggest driver of Intel’s turnaround continues to be its data center business, where cloud providers and enterprise customers are racing to build AI infrastructure. Revenue in Intel’s Data Center and AI Group surged 59% from a year earlier to $6.3 billion, significantly outpacing growth in its traditional PC chip business.
Meanwhile, revenue from the company’s Client Computing Group, which supplies processors for personal computers, rose 13% to $8.9 billion. However, Intel expects PC demand to remain relatively flat during the third quarter because of ongoing memory shortages affecting the broader industry.
Chief Financial Officer David Zinsner said customer demand remains exceptionally strong, with Intel struggling to keep pace. “Customers continue to signal a strong and sustainable spending environment,” Zinsner said during the company’s earnings call, adding that Intel is currently supply constrained as demand from data center customers exceeds available production.
To capitalize on that demand, Intel said it has begun signing long-term agreements with customers for its server processors. Some contracts lock in pricing, while others guarantee production volumes, a strategy increasingly common across the semiconductor industry as manufacturers seek greater visibility and protection against future swings in AI-related demand.
The company disclosed that it has already signed 10 long-term agreements, reflecting customers’ willingness to secure future chip supply as AI infrastructure spending accelerates.
Intel is also increasing investment in its manufacturing ambitions. Executives said capital expenditures will rise meaningfully next year as the company expands its foundry business, which manufactures chips for external customers in addition to Intel’s own products.
Speaking with CNBC, Zinsner said Intel’s newest manufacturing technology, known as 14A, is progressing ahead of previous generations at the same stage of development. Much of the additional spending will go toward factory equipment needed to expand production capacity.
Intel’s foundry division generated $5.8 billion in quarterly revenue, a 31% increase from a year ago. Earlier this week, the company announced cybersecurity firm Fortinet as the first publicly named foundry customer secured under Tan’s leadership, though that partnership relies on an older manufacturing process.
Even so, investors continue waiting for Intel to announce a major flagship foundry customer capable of validating its strategy to compete more directly with industry leader Taiwan Semiconductor Manufacturing Co.
Another bright spot came from profitability. Intel’s gross margin rebounded to 42%, up sharply from just 2.5% a year earlier. The company attributed the improvement to higher sales volumes, a richer mix of premium chips and stronger pricing.
