Intel surprised analysts with better-than-expected second quarter revenues, marking a potential turning point for the semiconductor giant that has struggled to keep pace with the AI revolution. The company reported Q2 revenue of $12.9 billion, representing a modest 0.2% year-over-year increase and significantly exceeding analyst estimates of $11.9 billion.
The company’s client computing division performed particularly well, generating $7.9 billion in revenue and surpassing predictions of $7.3 billion. This success was partially attributed to customers rushing to purchase chips ahead of President Trump’s import tariff
implementation. Data center operations brought in $3.9 billion, beating the $3.7 billion estimate, while the foundry segment achieved $4.4 billion in line with projections.
Despite these positive revenue figures, Intel posted a loss of 10 cents per share, falling short of both year-over-year comparisons and the company’s April outlook. The adjusted gross margin stood at approximately 30%, significantly lower than historical levels when Intel dominated the data center market, and well below current industry leader Nvidia’s 70% margins in the AI chip sector.
Looking ahead, Intel provided an optimistic forecast for the third quarter, projecting sales between $12.6 billion and $13.6 billion, with an expected gross margin of 36.0% – an 18% year-over-year improvement. However, analysts remain cautious about sustained PC demand, suggesting the recent surge might be artificially inflated by tariff-related inventory building.
Under new CEO Lip-Bu Tan’s leadership, Intel is implementing significant strategic changes. The company announced a 15% reduction in workforce, aiming to end the year with 75,000 employees – a more than 20% decrease from the June quarter. Additionally, Intel has halted previously announced projects in Germany and Poland, while slowing construction at its planned Ohio facility.
The chipmaker is refocusing its strategy on three key areas: competing in the AI chip market, reclaiming market share in PC processors, and developing its advanced 14A technology for large customers. CFO Dave Zinsner reported progress on the company’s 18A production technique, with more competitive chips expected to enter production by year-end.
Intel’s transformation comes at a crucial time as it attempts to recover from falling behind competitors like Nvidia, AMD, and Taiwan Semiconductor Manufacturing Company in the artificial intelligence chip sector. The company’s stock responded positively to the quarterly results, rising approximately 2% in after-hours trading, though its year-to-date increase of 13% still lags behind the performance of key rivals.
The company maintains its commitment to reducing operating expenses to around $17 billion this year and $16 billion in 2026. However, challenges persist as Intel continues to rely on Taiwan Semiconductor Manufacturing for some of its best offerings, impacting profit margins. CEO Tan has emphasized a more disciplined approach to investments, stating that “every investment must make economic sense.”
Despite stronger-than-expected demand in the second quarter, Intel acknowledges that some of this strength might be attributed to customers attempting to avoid future tariffs rather than representing sustainable demand growth. The company’s immediate focus remains on developing products for underserved market segments while working to reestablish its engineering-focused culture under Tan’s leadership.