Intel Corporation (INTC) Earnings & Analysis

Latest quarter

Intel reported Q2 FY2026 revenue of $16.1 billion, above the $14.4 billion consensus; revenue was 25.4% higher than a year earlier, when Intel reported $12.9 billion. Intel reported non-GAAP EPS of $0.42, above the $0.22 consensus, while its GAAP diluted loss was −$2.16 per share versus −$0.67 a year earlier.

Intel reported gross margin of 40.4%, compared with 27.5% a year earlier, and operating margin of 11.1%, compared with −24.7%. The company reported free cash flow of $4.5 billion, versus −$1.5 billion in the prior-year quarter. Intel said Data Center and AI revenue grew 59.0% year over year and generated $2.5 billion of operating profit, while Intel Foundry reported external revenue of $293.0 million and an operating loss of −$2.1 billion.

Intel said Q2 revenue was $1.8 billion above the midpoint of its guidance, while non-GAAP EPS of $0.42 exceeded its $0.20 outlook. The company’s reported gross margin of 40.4% was above its 39.0% guidance.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Lip-Bu Tan said demand for Intel products continued to exceed the company’s growing supply, citing demand associated with the build-out of compute infrastructure. He said Intel’s factories across Intel 7, Intel 3 and Intel 18A exceeded internal volume targets during Q2, as yields improved, cycle times shortened and wafer starts increased. Tan said 18A output increased during the quarter and that Intel had begun risk production of 18AP.

Chief Financial Officer David Zinsner said Q2 revenue, gross margin and EPS exceeded Intel’s guidance, attributing the result to higher revenue, improved yields, higher average selling prices from mix and pricing actions, and operating leverage. Zinsner said client results exceeded Intel’s expectations largely because of average selling prices, including changes in product mix and pricing intended to address cost inflation. He also said new products remained below the corporate-average margin while early in their lifecycle, although Intel expected yields to improve.

For the quarter ahead, Zinsner said supply remained tight and that supply growth was weighted toward late Q3 and Q4, particularly for servers. He said Intel expected PC consumption to be sub-seasonal in the second half, affected by memory prices and constraints, while its outlook for server CPU demand had improved. Tan said Intel had a roadmap to improve competitiveness, acknowledged that Intel remained behind in some areas, and said the company was working to catch up.

Analysts asked about higher capital spending and its timing. Zinsner said the spending would include advanced packaging but be weighted toward front-end fabrication, and that Intel would add capacity based on customer demand across its businesses. He said Intel had not provided a specific 2027 capital-expenditure figure because the company was still determining the details. Asked about financing, Zinsner said Intel could access capital markets if additional investment were needed.

Guidance

Intel raised its FY2026 capital-expenditure outlook to more than $20 billion, citing customer-demand signals. The company also raised its FY2026 non-GAAP operating-expense outlook to roughly $16.5 billion.