Intel (NASDAQ: INTC) reported its second-quarter financial results for the period ending June 2026, with revenue and profits significantly surpassing market expectations. AI-related businesses served as the core growth engine, as the Data Center and AI division's revenue surged 59% year-over-year. However, due to non-cash accounting losses under GAAP, the company recorded a net loss of $11 billion, and its adjusted free cash flow turned negative.
The quarterly report showed revenue of $16.1 billion, a 25% increase year-over-year, marking the strongest quarterly growth since 2011 and exceeding analyst consensus estimates of $14.4 billion by nearly $2 billion. On a non-GAAP basis, net income was $2.2 billion, or $0.42 per share, returning to profitability and roughly doubling market expectations. Gross margin improved significantly to 41.8%, up 12.1 percentage points from the same period last year.
AI-related businesses overall grew more than 70% year-over-year, contributing nearly 70% of total revenue. The Data Center and AI (DCAI) division posted revenue of $6.3 billion, up 59% year-over-year, setting a record for the strongest quarterly growth in server business history. Management indicated that as AI applications evolve from training to autonomous agents, demand for general-purpose CPUs has risen substantially, with the Xeon 6 series processors becoming one of the fastest-shipping products in the company's history. The Client Computing and Physical AI Group (CCPG) generated $8.9 billion in revenue, up 13% year-over-year. The foundry business (Intel Foundry) reported revenue of $5.8 billion, a 31% increase, though it still recorded an operating loss of $2.089 billion.
Despite significant improvements in core operations, the company posted a GAAP net loss of $11 billion, primarily driven by a $12.5 billion non-cash fair value loss related to U.S. Department of Commerce custodial shares, which increased due to a rise in stock price. Additionally, impacted by a net cash outflow of $12.2 billion from partner funds, adjusted free cash flow stood at -$8.4 billion.
As customer demand continues to outpace supply capacity, Intel raised its full-year 2026 capital expenditure forecast from $18 billion to over $20 billion. The company also previewed that 2027 capital expenditures will be significantly higher than 2026 levels, with the majority allocated to its domestic manufacturing network. For the third quarter, Intel expects revenue between $15.8 billion and $16.8 billion, with adjusted earnings per share projected at $0.38, both above analyst estimates.
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