Intel Q2 Revenue Posts Fastest Growth in Nearly 15 Years on AI Infrastructure Boom, Profit and Outlook Beat Expectations, Shares Surge 5% After Hours

Intel (INTC-US) released its second-quarter 2026 financial results, reporting a 25% year-over-year revenue increase—the fastest quarterly growth since the third quarter of 2011—fueled by the surge in AI infrastructure investment. Both profitability and forward guidance surpassed market expectations, driving after-hours shares up as much as 11%, before moderating slightly.

According to the earnings report, Intel’s adjusted earnings per share (EPS) for Q2 came in at $0.42, significantly exceeding the LSEG-compiled analyst consensus of $0.21. Revenue reached $16.1 billion, also surpassing the expected $14.42 billion.

As of Thursday’s market close, Intel’s stock had risen over 170% year-to-date in 2026, following an 84% gain in 2025. Last year, the U.S. government acquired a 10% stake in Intel as part of a broader initiative to bolster domestic semiconductor manufacturing capacity. However, the stock pulled back 28% in July, and recent performance has been relatively weak.

Rising demand for server processors, driven by accelerating AI infrastructure investment, has become a key growth driver for Intel. The company’s Q2 revenue growth of 25% year-over-year marks the fastest quarterly pace in nearly 15 years.

CEO Lip-Bu Tan stated, "AI is driving unprecedented computing demand. We are executing on our strategy, and Intel is well-positioned to achieve long-term, sustainable growth in our core CPU business."

For the third quarter, Intel forecasts adjusted EPS of $0.38 and revenue between $15.8 billion and $16.8 billion—both figures above the LSEG analyst consensus of $0.27 and $15.1 billion, respectively.

The company also announced it has begun signing long-term supply agreements with customers for server CPUs, with some contracts locking in fixed prices and others securing guaranteed volumes. This long-term contracting model, increasingly common in the memory industry, aims to maintain pricing power and negotiation leverage even if the AI market experiences a downturn.

Intel said it has already signed 10 such long-term supply agreements. CFO David Zinsner noted, "Our capacity remains extremely tight, and data center customer demand has already exceeded our supply capacity."

During the earnings call, Zinsner added, "Customers continue to signal strong and sustained capital spending, reflecting that AI compute demand remains on a high-growth trajectory. We are currently facing a supply-constrained environment."

By business segment, the Client Computing Group (CCG), responsible for PC processors, posted Q2 revenue of $8.9 billion, up 13% year-over-year, remaining the company’s largest revenue contributor. However, the fastest-growing segment was the Data Center business, which saw revenue surge 59% year-over-year to $6.3 billion—highlighting AI server demand as the company’s primary growth engine.

Intel expects global PC market demand to remain flat in Q3, citing memory supply shortages that are constraining overall shipments.

To expand its foundry footprint, Intel said it will increase capital expenditures and expects a "significant increase" in capital investment next year, accelerating its transformation into a manufacturing services provider for other chip design companies.

In a CNBC interview, Zinsner said the development progress of Intel’s latest 14A process technology has already surpassed that of previous-generation processes at the same stage. Intel’s foundry business generated $5.8 billion in Q2 revenue, a 31% year-over-year increase.

However, the market continues to watch whether Intel can secure major external chip customers. The company did not announce any high-profile foundry clients this time. Currently, most of its foundry operations are focused on manufacturing its own chips. Earlier this week, Intel announced under Tan’s leadership that it had secured cybersecurity firm Fortinet (FTNT-US) as its first named foundry customer. However, the collaboration involves a more mature process node for producing security chips.

On profitability, Intel’s gross margin improved to 42% in Q2, a significant rebound from 2.5% in the same period last year. The company attributed the improvement to higher revenue scale, better product mix, and simultaneous increases in both the sales proportion and pricing of high-margin chips.