Intel Shares Surge After AI-Fueled Earnings Beat, Boosts Spending Plans

Intel Corp. (INTC) on Thursday announced a robust third-quarter revenue and profit forecast that exceeded analyst estimates, signaling strong demand for its central processing units (CPUs) fueled by the artificial intelligence boom. The company also raised its capital spending plans, sending its shares soaring 12% in after-hours trading.

Upbeat Outlook and AI Demand

Intel projected third-quarter revenue in a range of $15.8 billion to $16.8 billion, well above the average analyst estimate of $15.10 billion compiled by LSEG. The company expects an adjusted profit of 38 cents per share, compared to the consensus estimate of 27 cents.

Company executives attributed the strong outlook to a surge in demand for data center CPUs, driven by the buildout of infrastructure for so-called agentic AI, where autonomous systems perform complex tasks. This demand has prompted Intel to increase its capital expenditure forecast for the current year to $20 billion from a previous $18 billion, with further significant increases expected next year, according to Chief Financial Officer David Zinsner.

Second-Quarter Performance

For the second quarter ended June 27, Intel reported a 25.4% increase in sales to $16.13 billion, beating estimates of $14.42 billion. Adjusted profit was 42 cents per share, double the 21 cents per share analysts had anticipated.

Key business segments outperformed expectations:

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• Data Center and AI: Revenue was $6.26 billion, compared to estimates of $5.37 billion.
• Client Computing (PC chips): Sales reached $8.88 billion, surpassing estimates of $7.89 billion.
• Intel Foundry: The contract manufacturing unit posted $5.77 billion in sales, ahead of the $5.55 billion consensus.

Adjusted gross margin for the quarter came in at 41.8%, also beating the forecast of 38.8%.

Strategy and Market Context

The strong results appear to validate CEO Lip-Bu Tan’s strategy to regain technological leadership and expand the company's foundry business. Mr. Zinsner told Reuters that Intel has secured several long-term agreements, ranging from three to five years, with customers for its data center chips, bolstering confidence in its production plans.

The foundry business has gained traction, notably securing Tesla as a customer for its next-generation 14A process. The positive report also lifted shares of rival chipmakers in extended trading, with Arm Holdings and Advanced Micro Devices (AMD) both rallying more than 3%.