Intel’s finance team had a number it had waited a decade and a half to report. Second-quarter revenue came in at $16.1 billion, up 39 percent from a year earlier, the fastest growth the chip maker has posted in 15 years. The data-center business, the engine of the company’s turnaround, grew 59 percent, driven by demand for servers that run artificial-intelligence workloads.
The results, reported after the close of trading on July 23, sent Intel’s shares up more than 5 percent in after-hours trading. Chief Executive Lip-Bu Tan told investors that the company’s strategy of pairing its foundry business with its AI chip lineup is showing results, and management raised its third-quarter guidance to a range of $16.2 billion to $16.8 billion, with gross margins expected to keep improving.
Wall Street’s reaction was cautious approval. The numbers were better than analysts had modeled, and the guidance beat expectations, but the question on every investor’s mind is whether the momentum survives the year. “This is the first quarter where Intel’s AI story has real numbers behind it,” one analyst said. “The question is durability.”
The company’s path to this quarter was not smooth. Intel spent two years in retrenchment: layoffs, dividend cuts, an inventory correction in the PC market, and a steady loss of share in data-center CPUs to AMD. Tan, who took over as chief executive in early 2025, moved quickly to restructure, cutting costs, simplifying the product line, and refocusing the company on the two businesses he believed could carry it: advanced manufacturing and chips for AI.
The data-center rebound is the clearest sign that the strategy is taking hold. Every AI server needs host CPUs to manage the flow of data to and from accelerators, and Intel’s Xeon processors have been the default choice for that role. As hyperscalers built out AI capacity at record pace, Xeon orders climbed even in markets where Nvidia’s GPUs dominate the accelerator slot.
The PC market, Intel’s traditional base, is recovering as well. Corporate laptop replacements have picked up, and Intel’s latest laptop processors have won back share from AMD in premium notebooks, according to industry analysts. The recovery gives the company a second engine while the data-center and foundry businesses ramp.
The foundry side is progressing more slowly but moving in the right direction. Intel’s 18A manufacturing process has begun ramping, and the company has signed external customers for its foundry service, a business that lost money for years under previous management. Tan said the foundry’s losses are narrowing as utilization improves, though he stopped short of setting a profitability date.
Gross margin, the metric that had investors most worried, is improving. Intel guided margins upward for the third quarter, citing better product mix and higher factory utilization. The company’s margin collapsed during the downturn, falling to levels not seen in decades, and restoring it has been Tan’s central financial goal.
The balance sheet is in better shape than it was a year ago. Intel has cut debt, rebuilt its cash position, and reduced the cost structure that weighed on margins during the downturn. The company said capital spending this year will be disciplined, focused on the 18A and 14A ramps rather than on broad expansion.
The competitive backdrop remains difficult. AMD has taken significant share in server CPUs over the past five years, and Nvidia’s dominance of AI accelerators is not seriously contested. Intel’s own AI accelerator, the Gaudi line, has struggled to gain traction, and the company has been candid that its AI revenue will come mostly from CPUs, networking, and foundry work rather than from taking on Nvidia directly.
Analysts also note that the 39 percent revenue growth came off a weak base. Intel’s revenue fell sharply in 2024 and early 2025, so part of the jump is arithmetic. The more meaningful signal, they said, is that the company is growing again at all, and that its guidance implies continued growth into the second half.
The company’s customers are noticing the difference. Server builders say Intel has become more responsive on pricing and delivery than it was during the downturn, and that the Xeon roadmap has stabilized after a period of delays. PC makers, too, have reported stronger demand for Intel’s laptop chips as the market recovers.
There are risks ahead. AI capital spending is cyclical, and a slowdown in hyperscaler buildout would hit Intel’s data-center business harder than most, given its dependence on the AI server market. The foundry ramp carries execution risk, and the company’s next process node, 14A, has been pulled forward to risk production in late 2027, a schedule that leaves little room for error.
Tan has framed the turnaround as a multiyear project, and the second-quarter results are the first proof point. The company raised its full-year expectations, and executives said they see no sign of demand softening in the second half.
For now, the market is giving Intel credit for the quarter. The stock’s after-hours gain reflected relief as much as enthusiasm, relief that a turnaround announced with great fanfare is finally showing up in the income statement. Whether the AI-driven growth persists into 2027 will determine whether the rally has legs, and that question, for now, is unanswered.
