Intel's AI Turnaround? Q2 Revenue Growth Seen as Fastest in Six Years, Apple Orders in Focus

Intel (INTC-US) will release its second-quarter earnings after the U.S. market close on Thursday (23rd), a report that will test whether the American chip giant's fundamentals can support the strong rally this year, driven by transformation expectations and artificial intelligence (AI) demand. Intel's stock price has risen 185% year-to-date, nearly tripling from its original level, but has fallen over 25% since hitting a closing high on June 22, amid broader selling pressure in the semiconductor sector.

Analysts forecast that, benefiting from a rebound in central processing unit (CPU) demand, Intel's Q2 revenue could achieve the fastest growth rate in nearly six years. As CPUs are increasingly used to support AI agent operations, AI infrastructure development is creating new demand momentum for the company.

According to data compiled by LSEG, the market expects Intel's Q2 revenue to reach $14.42 billion, a 12.1% year-over-year increase, with adjusted earnings per share (EPS) of $0.21. Revenue from the Data Center and AI segment is projected to jump 36.4% to $5.37 billion, making it the main highlight of this earnings report.

Investors will also closely monitor whether Intel's foundry business can secure more external customers. The division has recently announced progress in partnerships, including a collaboration with Tesla (TSLA-US), but the market's biggest focus remains on whether Intel can win a processor manufacturing order from Apple (AAPL-US).

Former U.S. President Donald Trump announced in April that Intel and Apple might reach a chip manufacturing agreement, but neither company has confirmed this to date. If Intel successfully secures Apple's order, it would not only generate revenue for its foundry business but also significantly enhance its market credibility as an advanced chip foundry.

However, Intel still faces challenges from weak demand in the personal computer (PC) market and profitability far below historical highs. Bernstein analysts stated that while their outlook on Intel has improved compared to the past due to a more favorable market environment and investment narrative, the overall fundamentals remain challenging.

Last quarter, Intel unexpectedly sold inventory it had previously expected to be difficult to move, including older and lower-tier products that had been shelved, indicating some improvement in market demand.

The market forecasts Intel's adjusted gross margin for Q2 at 38.8%. TD Cowen analysts noted that heavy investments in foundry operations and costs from expanding capacity with new processes continue to suppress margins. Whether AI demand can offset weak PC demand and foundry spending pressures in this earnings report will determine whether Intel's stock price has further upside potential.