Intel Earnings AI Demand Lifts Forecast as Chipmaker Raises Investment Plans

Intel Earnings: Intel forecast stronger-than-expected third-quarter revenue and profit on Thursday, driven by rising demand for artificial intelligence (AI) data centre processors. The upbeat outlook sent the company’s shares up more than 5% in after-hours trading.

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The chipmaker expects third-quarter revenue of $15.8 billion to $16.8 billion, exceeding analysts’ average estimate of $15.1 billion, according to LSEG. Meanwhile, Intel projected adjusted earnings of 38 cents per share, ahead of market expectations of 27 cents.

AI demand fuels growth

Intel said growing demand for agentic AI, where autonomous software performs tasks on behalf of users, has boosted orders for its data centre central processing units (CPUs).

Although Intel shares have fallen more than 25% from their June record high amid a wider chip-sector sell-off, the stock remains up more than 170% this year.

The results strengthen Chief Executive Lip-Bu Tan’s strategy to restore Intel’s technology leadership and compete with rivals Nvidia and Advanced Micro Devices (AMD) in the expanding AI chip market.

Strong quarterly performance

For the second quarter ended June 27, Intel reported revenue of $16.13 billion, a 25.4% increase from a year earlier. The figure comfortably exceeded analysts’ estimate of $14.42 billion.

In addition, adjusted earnings reached 42 cents per share, doubling expectations of 21 cents. Adjusted gross margin also improved to 41.8%, outperforming forecasts of 38.8%.

The company’s Data Center and AI division generated $6.26 billion in revenue, while its laptop and desktop business posted $8.88 billion, both above analysts’ estimates.

Investment plans expand

As demand continues to rise, Intel increased its capital expenditure forecast for this year from $18 billion to $20 billion. The company also expects spending to rise significantly next year to support AI infrastructure growth.

Chief Financial Officer David Zinsner said Intel has signed long-term agreements ranging from three to five years for data centre CPUs and specialised AI chips, known as XPUs.

He added that Intel remains financially strong with approximately $30 billion in cash and a $10 billion credit facility. However, he said the company has no immediate plans to issue new shares.

Foundry business gains momentum

Intel also reported stronger performance from its contract manufacturing business. The foundry division generated $5.77 billion in second-quarter revenue, surpassing analyst expectations.

Furthermore, CEO Lip-Bu Tan said Intel is fully committed to launching high-volume production of chips using its next-generation 14A manufacturing process in 2028. He expressed growing confidence that the technology would remain highly competitive.

According to Intel, customer interest in the 14A process continues to increase. The company has already secured Tesla for its next-generation AI chip project, while reports have linked Apple to potential future manufacturing agreements, although neither company has confirmed those discussions.