Intel Shares Rise as Sales Surge 25% in Second Quarter -- 2nd Update

By Rolfe Winkler

Intel's business continues to turn around, demonstrated by a second-quarter earnings report that came in well ahead of investors' expectations.

On Thursday, the chip maker reported sales of $16.1 billion for the June quarter, up 25% from the year-earlier period and beating estimates from analysts by 11%.

Intel projected that September quarter revenue will come in between $15.8 billion to $16.8 billion, well above the $15.1 billion analysts had projected. Shares traded up as much as 13% after markets closed, before giving back some of those gains.

"Our Q2 results represent our strongest revenue growth in more than fifteen years," Intel Chief Executive, Lip-Bu Tan said in a statement. "AI is driving unprecedented demand for compute, and as we continue to execute, Intel is well-positioned to capture sustainable growth."

Chief Financial Officer David Zinsner said in an interview that the company was able to catch up in fulfilling demand in the second quarter after leaving business on the table in the first. He also pointed to strong average prices for Intel's products: "From a pricing perspective, things held up better than we expected," he said.

The artificial-intelligence revolution has begun to benefit Intel because the next wave to AI technology -- AI agents completing tasks for users -- relies on the central processing units, or CPUs, that are the company's specialty. Intel had fallen behind because the development and use of the most sophisticated models is primarily powered by graphics processing units, or GPUs, made by companies such as Nvidia.

With data centers packed with CPUs, the turnaround is seen in Intel's data center-revenue, which grew 59% compared with the prior-year period, continuing a recent trend. "Probably anything we can produce we can sell right now," said Zinsner, speaking about Intel's data- center products.

Intel raised its forecast for capital expenditures for this year to more than $20 billion up from $18 billion previously and said next year's capex will be "significantly above" this year's level. Executives said the higher spending was a sign of their confidence in future sales.

Intel isn't yet seeing the full negative impact from the AI boom that is poised to weigh on the other side of its business, selling chips that power personal computers, which grew 13% in the quarter. That impact will make itself felt in the business in coming quarters, said Zinsner.

Huge demand for AI servers in data centers is causing a shortage in memory chips, made by other companies, that are crucial components inside PCs. As a result, memory-chip prices have exploded, forcing PC makers to raise prices and reducing sales to consumers.

Meantime, Intel's business manufacturing chips for others is also seeing its growth accelerate. Sales for that unit rose 31% in the quarter after rising 16% the prior quarter.

Intel is one of the few American companies that operates chip-fabrication plants, a strategically important business that the Trump administration has sought to build up to reduce American dependence on Asian chip makers. The U.S. took a 10% stake in the company as part of the effort.

Apple, a key buyer of chips, recently signed a deal with Intel to have the company make some of Apple's chips, an important signal to the market that Intel is finally becoming more competitive with market leader Taiwan Semiconductor Manufacturing.

Zinsner said that Intel's most sophisticated chipmaking process, which it calls 14A and which is still under development, would move into volume production in 2028.

He said the company was "getting tons of traction" among customers for its advanced chip packaging product, or arrays of smaller chiplets that can be combined to function as a single custom semiconductor, adding that business has built up a "significant backlog."

Write to Rolfe Winkler at Rolfe.Winkler@wsj.com

(END) Dow Jones Newswires

July 23, 2026 18:14 ET (22:14 GMT)