Intel delivered a first-quarter performance that sharply exceeded Wall Street expectations, reigniting investor optimism around a company long seen as lagging in the artificial intelligence race.
The chipmaker reported adjusted earnings per share of 29 cents, far ahead of the 1-cent forecast, while revenue reached $13.58 billion versus expectations of $12.42 billion. The results triggered a 16% surge in after-hours trading, extending a broader rally that has seen Intel’s stock climb more than 80% this year.
The numbers indicate a shift in trajectory after a prolonged period of stagnation. Revenue rose 7.2% year-on-year, reversing a pattern of declines that had dominated five of the previous seven quarters. More importantly, growth is being driven by segments tied to the evolving structure of AI demand.
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Intel’s data center business, long overshadowed by the explosive rise of GPUs from Nvidia, posted a 22% increase in revenue to $5.1 billion. The rebound reflects a change in how AI workloads are being distributed. As enterprises move from training large models to deploying them at scale, demand for CPUs — which handle orchestration, inference, and general-purpose compute — is expanding.
That shift is beginning to play to Intel’s strengths. Google has committed to using multiple generations of Intel’s Xeon processors in its data centers, offering a degree of validation for a CPU-led approach to AI infrastructure at a time when GPU supply constraints and cost pressures are forcing hyperscalers to diversify.
Intel’s forward guidance reinforced the sense of momentum. The company expects second-quarter revenue between $13.8 billion and $14.8 billion, well above analyst expectations, and projected adjusted earnings per share of 20 cents compared with a 9-cent consensus. The outlook suggests management is seeing sustained demand rather than a temporary rebound tied to inventory cycles.
However, the financial underpinnings of the turnaround remain fragile. Intel reported a net loss of $4.28 billion for the quarter, a sharp widening from $887 million a year earlier. The deterioration underlines the high cost of maintaining an integrated device manufacturing model, one that requires continuous, capital-intensive investment in fabrication capacity even as returns remain uncertain.
Unlike most of its competitors, which rely on TSMC for chip production, Intel is attempting to rebuild itself as both a designer and a contract manufacturer. Its foundry business generated $5.4 billion in revenue, up 16% year-on-year, but much of that activity still comes from internal demand, underscoring the challenge of attracting external customers at scale.
The company’s manufacturing roadmap remains central to its valuation. Its latest processors, including Core Ultra Series 3 and Xeon 6+, are being produced on the 18A process node at its Arizona facilities. While the technology is positioned as competitive with leading-edge offerings, adoption remains limited and operational challenges persist.
Yield, the proportion of usable chips produced from each wafer, continues to be a critical issue. Reports of defects in some 18A wafers highlight the execution risks inherent in pushing advanced nodes to commercial scale. Until yields stabilize, Intel’s ability to compete with TSMC on cost and reliability will remain constrained.
Attention is already shifting to the next phase: the 14A node. Chief executive Lip-Bu Tan has signaled an aggressive commitment to the technology, writing earlier this year that Intel is “going big time into 14A.” The node is expected to be a defining test of whether Intel can regain leadership at the cutting edge of semiconductor manufacturing.
A potential breakthrough may lie in securing external demand. Elon Musk has indicated that Tesla plans to use Intel’s 14A process for chips at its proposed Terafab facility in Texas — an ambitious project tied to AI, robotics, and space-based data infrastructure via SpaceX. Musk acknowledged the developmental stage of the technology but expressed confidence in its timeline, saying, “by the time Terafab scales up, 14A will probably be fairly mature or ready for prime time.”
If realized, such a partnership could provide Intel with the kind of anchor customer it has struggled to secure, a critical step in transforming its foundry business from a largely internal operation into a competitive external service.
The company’s current position is also shaped by a broader reset. Former CEO Pat Gelsinger initiated the manufacturing pivot in 2021, but was replaced in 2024 after delays and execution challenges. Under Tan, Intel has moved to curb spending, cutting 15% of its workforce and scaling back expansion plans, including postponing major fabrication projects in Europe and the United States.
The recalibration is seen as an acknowledgment that earlier ambitions outpaced demand. As Tan wrote in a memo to staff, “Over the past several years, the company invested too much, too soon – without adequate demand.” The statement captures the core tension in Intel’s strategy: the need to invest heavily to regain leadership while avoiding further misalignment between capacity and market uptake.
External support has helped stabilize the narrative. The U.S. government has taken a significant ownership position as part of efforts to reshore semiconductor manufacturing, while investors, including SoftBank, have injected capital. These moves provide both financial backing and strategic urgency, tying Intel’s recovery to broader industrial policy objectives.
However, the competitive landscape remains unforgiving. Advanced Micro Devices continues to gain ground in CPUs, while Nvidia dominates the high-margin AI accelerator market. Intel’s path forward depends on carving out relevance across both domains, defending its CPU base while building a credible alternative in advanced manufacturing.
The latest results offer evidence that the turnaround is gaining traction. Revenue growth has returned, demand in key segments is strengthening, and investor sentiment is improving. But the widening losses, unresolved manufacturing challenges, and reliance on future technologies such as 14A underscore how much execution risk remains embedded in the story.