Intel Earnings Preview: Can AI-Driven CPU Demand and Foundry Progress Revive Intel Stock?

Intel earnings are in focus as the chipmaker prepares to report its second-quarter 2026 financial results after the U.S. market closes on July 23. With Intel shares retreating more than 30% from their June record high, investors are looking for evidence that the company's turnaround strategy—centered on AI-optimized CPUs and its expanding foundry business—remains on track.

Although Intel stock is still up sharply year-to-date, expectations heading into the report remain high. Investors are likely to judge the results not only on whether the company meets earnings forecasts but also on whether it can deliver stronger guidance and demonstrate continued momentum in its AI and manufacturing businesses.

Intel Earnings Preview: Wall Street Expects Return to Profitability

Consensus estimates suggest Intel will report second-quarter revenue of approximately $14.45 billion, representing around 12% year-over-year growth. Analysts also expect non-GAAP earnings per share (EPS) of $0.22, compared with a loss of $0.10 per share in the same period last year.

The company previously guided for revenue between $13.8 billion and $14.8 billion, with non-GAAP EPS of approximately $0.20 and a gross margin near 39%.

While those figures would mark a significant improvement from last year, Wall Street believes simply meeting guidance may not be enough. After Intel's strong rally earlier this year, investors are looking for results that exceed expectations, particularly revenue above $14.5 billion and gross margins holding above the 39% threshold.

Source from: https://finance.yahoo.com/

Data Center and AI Business Remains the Biggest Growth Driver

The largest area of focus will be Intel's Data Center and AI (DCAI) division.

The business generated $5.05 billion in revenue during the first quarter, growing 22% from a year earlier. Analysts expect another strong performance in Q2, with forecasts ranging between $5.6 billion and $5.8 billion, implying annual growth of roughly 40%.

The optimism reflects changing AI infrastructure requirements.

As enterprise AI workloads increasingly shift from large-scale model training toward AI inference and agentic AI applications, demand for server CPUs has strengthened. AI agents continuously perform reasoning, task scheduling, database retrieval, and software orchestration—tasks that rely heavily on CPUs working alongside GPUs.

Industry analysts believe this trend is increasing CPU content per AI server, improving demand for Intel's Xeon processors even as GPU adoption continues to accelerate.

Investors will be watching closely to see whether management confirms continued strength in enterprise AI deployments and provides an updated outlook for server CPU demand during the second half of the year.

Gross Margin Will Be the Key Profitability Test

Beyond revenue growth, gross margin may be the most closely watched financial metric.

Intel reported a stronger-than-expected 41% non-GAAP gross margin in the first quarter, comfortably ahead of previous guidance. However, management expects margins to moderate to approximately 39% in Q2 as production ramps for chips manufactured using its new 18A process technology.

The launch of Panther Lake processors is expected to significantly increase manufacturing volumes during the quarter. While the new process represents a major technological milestone, early-stage production typically carries higher manufacturing costs and lower yields.

Should Intel report gross margins above 39.5%, investors may interpret the result as evidence that 18A yields, pricing, and manufacturing efficiency are improving faster than expected. Conversely, margins below guidance could reinforce concerns that the transition to advanced manufacturing will continue weighing on profitability.

Intel Foundry Progress Faces Fresh Scrutiny

Intel's foundry business remains another major focus ahead of earnings.

The division generated $5.42 billion in revenue during the first quarter, up 16% year over year, but continued to post significant operating losses as Intel invests aggressively to build a competitive contract manufacturing business.

Investors will be looking for signs that foundry losses continue narrowing as production volumes increase.

Management is also expected to provide updates on several strategic initiatives, including customer interest in its next-generation 14A manufacturing process, adoption of advanced packaging technologies such as EMIB, and progress securing additional external foundry customers.

Any indication that major technology companies are expanding commitments to Intel's manufacturing platform could improve confidence in the long-term outlook for the business.

PC Market Recovery Remains Gradual

Intel's Client Computing Group (CCG), which remains the company's largest business, is expected to generate approximately $8 billion in second-quarter revenue.

Although global PC demand remains relatively soft, analysts note that pricing has remained resilient. Stable average selling prices have helped offset weaker shipment volumes, providing support for overall revenue.

Several analysts believe continued pricing discipline could allow Intel's PC business to outperform expectations despite an uneven recovery in consumer demand.

Q3 Guidance Could Determine the Stock's Next Move

While second-quarter results are important, investors may place even greater emphasis on Intel's outlook for the third quarter.

Current market expectations call for third-quarter revenue of roughly $15.2 billion. Several Wall Street firms believe Intel could guide above consensus if enterprise AI demand remains strong and PC pricing continues improving.

Analysts will also monitor management's commentary regarding capital expenditures, manufacturing investments, and AI-related demand trends across both cloud providers and enterprise customers.

A stronger-than-expected outlook could reinforce confidence that Intel's turnaround is gaining traction, while conservative guidance may renew concerns about slowing growth and elevated valuation.

Intel Stock Faces High Expectations

Despite the recent correction, Intel shares remain significantly higher than they were at the beginning of the year, leaving little room for disappointment.

Technical indicators suggest the stock has entered oversold territory following its decline from June highs, with momentum indicators showing selling pressure has eased. However, valuation remains relatively demanding compared with historical levels, meaning investors are likely to require clear evidence of improving execution before bidding shares higher.

Wall Street currently maintains a broadly neutral stance on Intel, with the consensus rating remaining Hold, although price targets vary widely depending on analysts' confidence in the company's manufacturing turnaround.