Intel's stock rose in after-hours trading on Thursday after the company released its second-quarter results. Both its revenue and guidance for the quarter exceeded Wall Street expectations, with particularly strong growth in its data center and AI businesses being the main drivers of its overall performance.
Revenue growth rate reaches fastest pace in many years
The financial report shows that Intel's total revenue increased by 25% year-over-year in the second quarter, the company's strongest quarterly revenue growth since 2011. The market is not only focused on the revenue scale, but also on the improvement in the growth structure.
Of this, the data center and AI business generated $6.3 billion in revenue in the quarter, a 59% year-over-year increase. This growth was primarily driven by cloud service providers and enterprises continuing to expand their investment in computing infrastructure, leading to increased demand for server processors for AI workloads.
Intel's client computing business also maintained growth. The Client Computing Group, responsible for PC processors, reported revenue of $8.9 billion for the quarter, a 13% year-over-year increase. Management expects overall PC demand to remain stable in the third quarter, partly due to tight memory supply, but growth in the data center business will support overall performance.
Profit margins have recovered significantly.
In addition to revenue growth, Intel's profitability also improved significantly this quarter. The company's gross margin rose to 42%, compared to only 2.5% in the same period last year. Intel attributed this change to increased revenue, a higher proportion of high-margin products, and improved pricing.
Intel's foundry business generated $5.8 billion in revenue for the quarter, a 31% year-over-year increase. Intel also stated that it will significantly increase capital expenditures next year to accelerate its contract chip manufacturing business.
Increased investment in 14A process
Chief Financial Officer David Zinsner stated that a significant portion of the new spending will be allocated to factory equipment for the next-generation 14A process. Management said that this process is progressing faster than the company's previous generations of technology.
Intel CEO Liwu Chen stated that artificial intelligence is driving unprecedented demand for computing power, and the company hopes to leverage this to expand the continued growth potential of its CPU business. For the market, Intel's current recovery no longer relies solely on its traditional PC business; the importance of AI infrastructure demand is rising.
Additional information:The report mentioned that Intel's stock price rose by more than 170% in 2026, but fell by about 28% in July before the release of this financial report.
