Intel Earnings Might Prove the AI Boom Is Still Going Strong — Or About to Stall
Intel shares have surged over 350% in the past year on the promise that CPUs are becoming the backbone of AI infrastructure, but Thursday's earnings report will reveal whether that thesis has real legs or just hype propping up a…
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Investors are watching Intel (NASDAQ: INTC | INTC Price Prediction) ahead of second-quarter results due after Thursday’s close. Shares have run 185.77% year to date and 353.35% over the past year, but sit 21.3% below the June high.
An AI Rerating Meets a Reality Check
The setup this quarter is loaded. Last quarter, Intel posted non-GAAP EPS of $0.29 on revenue of $13.577 billion, a 7.18% year-over-year gain and the sixth straight quarter of revenue above expectations. Data Center and AI revenue jumped 22% to $5.052 billion, and Foundry grew 16% to $5.421 billion.
CEO Lip-Bu Tan told analysts that “the CPU is reinserting itself as the indispensable foundation of the AI era”, with the CPU-to-GPU ratio in inference workloads shifting from 1-to-8 toward 1-to-4. Analysts now expect the fastest quarterly revenue growth in about six years, driven by CPUs increasingly used to power AI agents.
Consensus Estimates Snapshot
| Metric | Q2 2026 Guidance | Q2 2025 Actual |
|---|---|---|
| Revenue | $13.8B to $14.8B | $12.859B |
| Non-GAAP EPS | $0.20 | $(0.10) |
| Non-GAAP Gross Margin | ~39.0% | n/a |
| DCAI Revenue (Street est.) | $5.37B (+36.4% YoY) | $3.939B |
Margins, Apple, and the PC Question
I’ll be watching three things closely. First, gross margin. TD Cowen analysts flagged that adjusted gross margin is expected around 38.8%, still pressured by heavy foundry investments and the costs of ramping new manufacturing processes. Any push above 41% would validate the operational leverage story.
Second, the Apple (NASDAQ:AAPL) angle. President Trump announced a potential deal in April for Intel to manufacture processors for Apple, though neither company has confirmed it. Any acknowledgment on the call would be a foundry watershed. Prediction markets already assign a 52% probability that Foundry revenue tops $6 billion.
Third, the PC drag. Management is “prudently planning for PC demand to weaken in the second half”, with full-year PC unit TAM expected down low double digits. Client Computing grew just 1% last quarter, and you should look at whether that line stalls further while data center accelerates.
Options positioning suggests measured optimism, with a full-chain put/call ratio of 0.62, and Polymarket traders assign an 87.5% probability Intel beats.
The Quarter That Decides the Rerating
Intel’s stock has already priced in a lot. With shares at $105.84 and the analyst target sitting at $106.70, this earnings report needs to justify the rerating. If DCAI clears $5.4 billion and Foundry margins improve, the AI-CPU thesis holds. If PC weakness bleeds into guidance, the pullback from June’s high starts looking like the start of something bigger.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, and Money Morning. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
