SAN FRANCISCO – Intel on July 23 said it would beat expectations for quarterly profit and revenue, sending its stock up 12% in after-hours trading.
The US semiconductor giant also raised its spending plans for the next two years as construction of AI data centers increases demand for central processing units (CPUs).
Intel expects third-quarter revenue to be between $15.8 billion and $16.8 billion, compared with the average analyst estimate of $15.1 billion, according to data compiled by LSEG.
Adjusted earnings are expected to be 38 US cents per share, compared to analysts’ expectations of 27 US cents per share.
The company is benefiting from a boom in so-called agent AI, in which autonomous agents perform tasks such as computer coding on behalf of human users.
The company’s stock has fallen more than 25% from its record closing price on June 22, following a broader decline in semiconductor stocks, but is set to rise more than 170% in 2026.
For the second quarter ended June 27, Intel reported revenue of US$16.13 billion, an increase of 25.4%, and adjusted earnings of US$42 per share (compared to estimates of US$14.42 billion and US$21 per share).
Adjusted gross margin was 41.8%, compared to the expected 38.8%.
Agentic AI causes CPU demand to skyrocket
The shift to AI agents has revived demand for data center CPUs, and Intel executives said in early 2026 that they were caught off guard by demand outpacing the company’s ability to make chips.
Chief Financial Officer David Zinsner told Reuters in an interview that Intel is raising its 2026 capital spending forecast to $20 billion from $18 billion due to strong demand.
Zinsner also said Intel expects capital spending to “increase significantly next year.”
“This shows confidence in the growth opportunities for the business,” Zinsner said.
He said the company has entered into various long-term contracts with customers for data center CPUs and specialized chips called XPUs.
Contracts range from three to five years, and some commit to both chip volume and price, while others only commit to volume, Zinsner added.
But he also said Intel will continue to be disciplined with its spending.
“When circumstances change, we often have to renegotiate, so we can’t fully agree to (a long-term contract),” Zinsner said.
But customers “don’t sign unless they’re really confident in what they’re investing in.”
He added: “This gives us a lot of confidence in what we should plan for in terms of outcomes.”
Zinsner said Intel has about $30 billion in cash and a $10 billion line of credit, but there is no possibility of a stock sale, although it is not currently authorized.
“I’m not going to (rule out) that possibility, but there are no concrete plans at this point,” he said.
The results justify Chief Executive Officer Lip Vu Tan’s costly strategy to regain technology leadership and compete with rivals such as Nvidia and AMD in the fast-growing AI chip market.
Investors are focusing on Intel’s data center and foundry businesses as key indicators of a successful turnaround.
For Intel’s data center and AI business, the company announced second-quarter revenue of $5.37 billion, compared to expectations of $6.26 billion.
Also in extended trading, rival chipmakers Arm Holdings Inc. and Advanced Micro Devices Inc. each rose more than 3%, creating more than $100 billion in stock market value along with Intel.
Intel said its laptop and desktop division had second-quarter revenue of $8.88 billion, compared to an estimated $7.89 billion.
Zinsner said that in the company’s laptop and desktop business, unit sales were down but average prices were up as Intel moved from supplying low-cost chips for entry-level machines back to chips for high-end devices.
Contract manufacturing gains momentum
A key part of Intel’s turnaround strategy is contract manufacturing, or foundry business.
Intel’s foundry business had second-quarter revenue of $5.77 billion, compared to analysts’ expectations of $5.55 billion.
The division secured Elon Musk’s Tesla as a customer for its next-generation 14A process for its TerraFab AI chip project, boosting confidence in Intel’s efforts to land a major buyer.
Expectations were high for another high-profile victory in April. US President Donald Trump announced that Apple has reached an agreement with Intel to manufacture processors.
Neither company has confirmed the deal.
Nvidia, which dominates the AI accelerator market, also made an unusual entry into the CPU space with its Vera processor, while big tech companies like Amazon and Alphabet continue to develop their own Arm-based CPUs.
