Intel (NASDAQ:INTC) shares climbed more than 4% in premarket trading on Friday after the semiconductor company posted its fastest quarterly revenue growth in over 15 years and issued stronger guidance for the current quarter, highlighting continued momentum from artificial intelligence investment.
The latest results exceeded Wall Street forecasts and reinforced investor confidence that Intel’s turnaround strategy is gaining traction under Chief Executive Lip-Bu Tan.
Revenue and earnings outperform forecasts
For the second quarter, Intel reported adjusted earnings of $0.42 per share, comfortably ahead of analysts’ consensus estimate of $0.21 per share.
Revenue increased 25% year-on-year to $16.13 billion, surpassing expectations of $14.33 billion and marking the company’s strongest quarterly sales growth in more than a decade and a half.
Looking ahead, Intel projected third-quarter revenue of between $15.8 billion and $16.8 billion, above the market forecast of $15.1 billion. The company also expects adjusted earnings of $0.38 per share during the period.
AI demand continues to accelerate Intel’s recovery
The latest performance suggests Intel’s restructuring efforts are benefiting from sustained demand for AI-related computing infrastructure.
The company remains well positioned to capitalize on expanding AI investment through its processor business and semiconductor manufacturing operations. Intel produces CPUs that support increasingly sophisticated AI applications and is one of the few U.S.-based companies operating advanced semiconductor fabrication facilities.
Its strategic importance has also attracted support from the U.S. government as policymakers seek to strengthen domestic semiconductor production and reduce reliance on manufacturing capacity in Asia.
“What’s going on is much bigger than Intel. Results are a sign that we are still much [earlier] in AI than many think. I think of Intel CPUs as an accessory to the AI buildout,” said Gene Munster, Managing Partner at Deepwater Management.
AI infrastructure investments gather pace
During the quarter, Intel introduced new rack-scale AI systems, launched its Xeon 6+ server processors built using the Intel 18A manufacturing process, expanded its physical AI software portfolio and announced new partnerships with Foxconn, Siemens and Fortinet.
The company also confirmed that its foundry business has entered high-volume production for selected Panther Lake processors using ASML’s High-NA EUV technology.
In addition, Intel unveiled plans to invest €5 billion to expand production capacity for its Xeon processors.
Data centre business drives growth
Intel’s Data Center and AI division delivered the strongest performance during the quarter, with revenue rising 59% year-on-year to $6.3 billion.
Revenue from the Client Computing and Physical AI business increased 13% to $8.9 billion, while the company’s foundry segment recorded a 31% increase in sales to $5.8 billion.
Capital spending increases despite long-term challenges
Intel raised its full-year capital expenditure forecast to more than $20 billion, up from previous guidance of $18 billion, while also indicating that investment in 2027 is expected to exceed 2026 levels.
The increased spending reflects broader industry investment in AI infrastructure, with major technology companies continuing to commit billions of dollars to expanding computing capacity.
However, Intel Chief Financial Officer David Zinsner told The Wall Street Journal that the rapid expansion of AI could eventually weigh on demand for personal computer processors, despite the division reporting 13% revenue growth during the quarter.
Intel stock price
