Intel Just Posted Its Fastest Revenue Growth in More Than 15 Years, but the Stock Is Falling. Here’s What’s Going On.
Intel (INTC -7.89%) reported second-quarter results after the market closed on Thursday, and they were the strongest numbers of its turnaround so far. Revenue rose 25% year over year to $16.1 billion — the chipmaker’s fastest quarterly growth in more than 15 years, and far above management’s own April forecast, which topped out at $14.8 billion.
The stock, which closed Thursday at $100.23 after slipping 2.3% in the regular session, jumped about 12% in after-hours trading Thursday. But at the time of this writing on Friday, that gain had been erased, and shares had fallen below Thursdays closing price.
Intel’s revenue was roughly flat in 2025, and it grew just 7% year over year in the first quarter of 2026. From there to 25% is a sharp acceleration for a business many investors had all but written off.
So, why didn’t the stock hold its gain?
Image source: Intel.
Where the growth came from
Powering its business during the quarter was Intel’s data center and AI (artificial intelligence) segment. Revenue there rose 59% year over year to $6.3 billion, accelerating from 22% growth in the first quarter as AI-related demand for the company’s server processors climbed.
But the growth was broad-based, too. Client computing and physical AI revenue rose 13% to $8.9 billion. And Intel’s foundry segment (the business that manufactures chips, still mostly Intel’s own) grew 31% to $5.8 billion.
“AI is driving unprecedented demand for compute, and as we continue to execute, Intel is well-positioned to capture sustainable growth across our CPU franchise, ASICs, advanced packaging and vast wafer foundry network,” said CEO Lip-Bu Tan in the company’s second-quarter earnings release.
Profitability may be the more impressive part of the report. Intel’s non-GAAP (adjusted) gross margin came in at 41.8%, up 12.1 percentage points from the year-ago period. Even more, its adjusted operating margin swung to 17.2% from negative 3.9% a year earlier. Adjusted earnings per share were $0.42, against a $0.10 adjusted loss per share in the year-ago quarter. In dollars, that’s $2.2 billion of adjusted net income from a business that ran an adjusted loss in the same period last year. The quarter also produced $7.0 billion in operating cash flow.
Of course, one number in the report needs decoding: Intel’s reported net loss of $11.0 billion. That figure reflects a $12.5 billion non-cash, mark-to-market charge tied to shares Intel holds in escrow under its CHIPS Act agreement with the U.S. government. It’s an accounting charge, not a cash cost from operations.
Today’s Change
(-7.89%) $-7.91
Current Price
$92.32
Key Data Points
Market Cap
$464BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Day’s Range
$91.58 – $101.74
52wk Range
$18.96 – $142.35
Volume
181.1M
Avg Vol
132.4M
Gross Margin
33.57%
The price now assumes more quarters like this
And looking ahead, Intel’s guidance suggests the momentum can hold. Management forecast third-quarter revenue of $15.8 billion to $16.8 billion, put adjusted earnings per share at $0.38, and forecast a 42% gross margin at the midpoint, all on an adjusted basis. At the midpoint, that implies year-over-year growth of about 19% — a step down from 25%, but a second straight quarter of growth the old Intel couldn’t have printed.
And the company is spending to meet the demand it sees. Chief financial officer Dave Zinsner said Intel is “meaningfully increasing our investments in equipment, clean room space, and substrates.” That spending should support growth, though the resulting depreciation could weigh on margins in the years ahead.
Then there’s the stock. Within the past year, shares traded below $20. Today, even after the pullback, shares trade aroudn $96.
This backdrop — a huge surge in the stock price over the last year — helps explain the market’s reaction today.
Valuation is where I hesitate. The stock’s price tag is simply hard to justify. The company commands a market capitalization of about $480 billion. Annualize the adjusted earnings pace of its current and guided quarters, and shares trade at about 60 times that figure. That price assumes quarters like this one become the norm — and for a long time.
So, is this the quarter that settles the argument? Partly. The turnaround is no longer just a story. The company grew 25% and produced a $2.2 billion adjusted profit doing it.
But given its sky-high valuation, the stock demands that the pace continue — even after a sharp pullback from 52-week highs recently.
