Intel shares jump 11% as AI demand drives fastest growth since 2011
Intel's second-quarter results crushed expectations as AI-fueled server demand drove its fastest revenue growth in nearly 15 years, though investors remain focused on its lagging foundry business.
Intel shares surged 11% in extended trading on Thursday after the chipmaker reported second-quarter earnings and revenue that easily topped analyst expectations. The company posted 25% revenue growth, marking its fastest expansion since the third quarter of 2011.
Intel generated $16.1 billion in revenue, significantly beating the $14.42 billion consensus estimate, while adjusted earnings per share hit 42 cents against a 21-cent forecast. For the current quarter, the company projects revenue between $15.8 billion and $16.8 billion, well above the $15.1 billion analysts anticipated, with adjusted EPS of 38 cents.
The outperformance stems from a surge in data center revenue, which jumped 59% to $6.3 billion as artificial intelligence infrastructure spending accelerates. "AI is driving unprecedented demand for compute," CEO Lip-Bu Tan said. "As we continue to execute, Intel is well-positioned to capture sustainable growth across our CPU franchise."
To manage supply constraints, Intel has signed 10 long-term agreements for server CPUs, focusing on fixed pricing or guaranteed volume. This strategy mirrors moves in the memory sector to protect pricing power in case the AI market eventually cools. Intel noted data center customers are currently demanding more chips than it can produce.
Intel's traditional PC unit, its largest by revenue, grew 13% to $8.9 billion, though the company expects flat PC sales in the third quarter due to a memory shortage. Meanwhile, gross margins recovered sharply to 42% from just 2.5% a year earlier, driven by manufacturing scale and a shift toward higher-margin products.
Despite the operational momentum, Intel's foundry segment continues to lack a major external customer, a critical milestone for its strategy of manufacturing chips for other firms. The unit generated $5.8 billion in sales, up 31% year-over-year, but primarily produces Intel's own silicon. This week it named Fortinet as its first foundry customer under Tan, though the cybersecurity firm is using an older manufacturing technology for security chips.
CFO David Zinsner said the newest 14A manufacturing process is ahead of historical schedules, and the company plans a "meaningful increase" in capital expenditures next year to expand capacity. The after-hours rally offers a respite for a stock that had dropped 28% in July. Even with the recent slump, Intel shares have soared over 170% in 2026, bolstered last year by the U.S. government taking a 10% stake to support domestic chip manufacturing.
