---
title: "INTC: Past the Darkest Hour, Old Guard Strikes Back"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/40156400.md"
description: "Intel released its Q1 2026 results (through Mar 2026) after the US market close on Apr 24, Beijing time. Key takeaways: 1) Core metrics: $Intel(INTC.US) reported revenue of $13.6bn (+7% YoY), well above company guidance ($11.7–12.7bn), driven by stronger server CPU demand and pricing.GPM was 39.4%, far ahead of the market’s 32.5% expectation. The QoQ expansion in GPM..."
datetime: "2026-04-24T01:51:42.000Z"
locales:
  - [en](https://longbridge.com/en/topics/40156400.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/40156400.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/40156400.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# INTC: Past the Darkest Hour, Old Guard Strikes Back

Intel released its Q1 2026 results (through Mar 2026) after the U.S. market close on Apr 24 Beijing time. Key takeaways:

**1) Core metrics**: $Intel(INTC.US) **reported revenue of $13.6bn (+7% YoY), well above company guidance ($11.7–12.7bn)**, driven by stronger server CPU demand and price hikes.

**GPM was 39.4%, far ahead of the Street (32.5%).** The sequential margin rebound reflected 10–15% server CPU price increases and better yields on newer process nodes.

**2) Cost actions**: Core opex (R&D + S&M) was $4.4bn, taking the core opex ratio down to 32.5%.

**Management kept cutting headcount and costs**, with total employees down to 83.2k, a QoQ reduction of 1.9k. The prior target was 75k by end-2025, and further cuts remain possible.

**3) Segment trends**: After the disclosure revamp, **client and Data Center & AI remain the main revenue drivers**, together accounting for 90%+ of sales.

**a) Client**: Q1 revenue was $7.7bn, up 1.3% YoY. Even with Panther Lake launched, global PC shipments rose ~4% YoY this quarter, suggesting **Intel likely lost share in PCs**.

**b) Data Center & AI**: Q1 revenue was $5.05bn, up 22% YoY.

The business is still centered on data center CPUs, with growth driven by Xeon demand and price increases (est. +10–15%). After partnering with NVIDIA, **Intel also announced deeper collaboration with Google, securing ties with both AI chip leaders for Xeon CPUs**.

As AI shifts from training to inference, market focus has moved to latency. CPUs handle data pre-processing and resource orchestration, reducing latency while improving inference efficiency.

**c) Intel Foundry**: Q1 revenue was $5.42bn, up 16% YoY. Although 18A has entered volume, foundry revenue still mainly came from Intel 7 this quarter. **External foundry revenue was about $170mn, with most capacity still serving internal Intel products**.

The latest 18A node is primarily used for Intel's Panther Lake. While **18A still trails TSMC in transistor density, sustained yield gains could make Intel a viable 'second source' for downstream customers**.

Foundry currently serves mainly internal demand and **urgently needs a flagship external customer for validation. The newly announced 'Terafab' collaboration with Elon Musk could serve as a showcase for future external foundry wins**.

**4) Next-quarter guide**: **Intel guides Q2 2026 revenue of $13.8–14.8bn, above the Street (~$13.1bn)**. **Q2 2026 GPM is guided to 37.5%**, **also ahead of the Street (34.7%)**.

**Dolphin Research view: Pricing lifts margins; foundry bets the future. The transition pain may be easing**

Intel delivered across the board, with revenue back to YoY growth and a sharp GPM rebound. **Top-line strength was driven by server CPU demand and pricing; margin gains by pricing and better yields on Intel 3 and 18A**.

**Wafer capacity still largely supports internal products**, with external foundry revenue at ~$170mn this quarter, about 3% of total manufacturing revenue.

More importantly, **Q2 guidance surprised positively**. **Revenue is guided to $13.8–14.8bn (+7–15% YoY), supported by both volume and price for server CPUs**.

**GPM (GAAP) is guided at ~37.5%, down QoQ due to the absence of Q1 inventory benefits and 18A ramp costs, yet still beating the Street (34.7%). The strong margin recovery underscores better-than-expected pricing and 18A/Intel 3 yield progression**.

Shares have rallied on a string of positives, including **buying back the stake in the Ireland fab and deepening ties with Musk and Google**, which helped restore confidence.

Key investor focus areas for Intel:

**a) CPU share: Intel's performance foundation**

**Intel still leads in aggregate CPU share**, but faces intense competition from AMD, which has overtaken Intel in desktop CPUs.

In server CPUs, Intel's shipment share has been squeezed below 80% by AMD. **Q1 Data Center & AI growth was driven by broader server CPU demand and price hikes (+10–15%)**.

**b) Repurchasing the Ireland Fab 34 stake**

To fund its turnaround, Intel previously sold 49% of Fab 34 to Apollo. **On Apr 1, 2026, Intel announced a ~$14.2bn buyback of that stake, restoring 100% control**.

Fab 34 is Intel's only EUV-enabled site in Europe, **now ramping Intel 3 for Core Ultra PC processors (Meteor Lake) and Xeon 6 server CPUs (Granite Rapids)**. **The buyback signals confidence in the upcycle and a desire to retain full economics**.

Intel is shifting from defense to offense, **showing confidence in operating cash flow and less need to 'sell assets' to fund operations**.

**c) Strategic partnerships: Musk and Google**

**i) Musk partnership**: **Intel and Musk's Tesla, SpaceX and xAI jointly launched the 'Terafab' project**.

The plan is to build a mega fab in Austin, TX to design and manufacture ultra-high-performance chips for robotics, the Dojo supercomputer and autonomous driving.

**While details remain undisclosed, this could provide the critical flagship customer validation Intel Foundry needs and insert Intel into the leading-edge external foundry race**.

**Tesla said on its earnings call that it will make a $3bn initial investment, and that Terafab is expected to use Intel's 14A node**. Based on prior timelines, 14A volume is targeted around 2028. **The added detail improves visibility, and Intel shares rose ~3% after hours**.

**ii) Google partnership**: Intel and Google announced a multi-year collaboration to advance next-gen AI and cloud infrastructure, **centered on deploying multiple generations of Xeon across Google's global footprint and co-developing custom ASIC-based IPUs**.

Google is developing its own Axion CPUs (ARM), but x86 still dominates enterprise. **With most enterprise workloads running on x86, the Xeon collaboration aims to win more external enterprise customers** (similar to the NVIDIA–Intel cooperation offering x86 options).

Beyond CPU supply, **the joint development of IPUs (akin to NVIDIA's DPUs) is in focus, offloading network, storage and security tasks**. This frees CPUs from low-level chores, **letting them focus on agent orchestration and other high-value logic, reducing CPU pressure**.

Google's **TPU v8 also introduced 'TPU Direct Storage'**, writing data from Google-managed storage directly into HBM and bypassing traditional CPU hops. **This is not a CPU downgrade; it lets CPUs concentrate on complex model logic, tool calls and feedback loops**.

At a current market cap of ~$335.3bn, Intel trades at ~33x 2027 post-tax core operating profit (based on 11% revenue CAGR, 46.5% GPM and a 10% tax rate). **The premium vs. TSMC (~24x PE) embeds expectations for a CPU rebound and foundry optionality**.

Overall, Intel posted a solid quarter. The sharp GPM recovery shows that server CPU pricing and yield improvements beat expectations. **With PC demand pressured by higher memory prices, the focus remains on server CPUs, foundry progress and margin trajectory**.

**Deeper partnerships with NVIDIA and Google affirm x86 remains a key option for customers**, underpinning server CPU growth. **Meanwhile, the 'Terafab' project with Musk raises expectations for external foundry wins**.

**Shares have rallied on catalysts (buyback, Google and Musk partnerships). The latest print added a positive surprise, highlighting strength in server CPUs**.

**With deep ties now in place with two AI leaders, the next focus is foundry execution. 18A is in ramp, so watch yields and GPM progression**.

**Given tight capacity at TSMC, a credible Intel foundry offering could serve as a 'second source', capturing overflow orders and expanding growth optionality**.

Below are Dolphin Research's detailed takes on Intel:

**I. Core metrics: Revenue and margins beat big**

**1.1 Revenue**: **Q1 2026 revenue was $13.6bn (+7% YoY)**, well above the $11.7–12.7bn guide, driven by stronger server CPU demand and pricing.

**1.2 GP and GPM**: Q1 2026 GP was $5.35bn, up 14% QoQ. **GPM reached 39.4%, up 330bps QoQ, and well ahead of the Street (32.5%)**. The lift was driven by server CPU price increases and yield improvements.

**Management guides Q2 GPM (GAAP) at 37.5%, beating the Street (34.7%).** The QoQ dip reflects the absence of Q1 inventory gains and early-stage 18A ramp headwinds. **With server CPU pricing and 18A ramping, margins should recover again in the second half**.

**1.3 Opex**: **Core opex in Q1 2026 was $4.4bn, down 8% YoY**. Cost discipline has been a focus under the new CEO.

**Breakdown: i) R&D** $3.38bn, down 7% YoY; **ii) S&M** $1.04bn, down 12% YoY.

**Headcount reduction continued**, with total employees down to 83.2k, -1.9k QoQ. The prior goal was 75k by end-2025, implying further cuts are possible.

**1.4 Net income**: **Intel posted a Q1 2026 net loss of $3.73bn**. **On a core operating basis, profit was roughly $930mn, a better reflection of underlying operations**. The sequential improvement came from server CPU pricing and higher GPM.

**Note:** Core OP = GP – R&D – S&M

**II. Segment details: AI re-accelerates; foundry breakthroughs are key**

Under the new CEO, Intel again adjusted its disclosure. The in-house product biz is split into Client and Data Center & AI, alongside Foundry and 'All Other'.

**Network and Edge is no longer standalone; Altera, Mobileye and IMS are grouped into 'All Other'.** After Altera and Mobileye were separated, 'All Other' mainly includes IMS and early-stage initiatives.

Post-resegmentation, **Client and Data Center are the largest revenue contributors**. **Including foundry and intersegment eliminations, Intel remains largely self-supplied, with external foundry revenue under 3%**.

**2.1 Client**

**Q1 2026 Client revenue was $7.7bn, +1.3% YoY.** The segment is stabilizing but lagged the broader PC market.

Note: In Q1 2025, Intel reclassified some former Network & Edge revenue into Client.

IDC data show global PC shipments of 65.6mn units (+3.8% YoY). With memory price hikes and tighter state subsidies, the industry remained sluggish. **Intel's +1.3% YoY Client growth implies ongoing share loss in PCs**. AMD has already overtaken Intel in desktop CPUs.

**Intel also announced a PC partnership with NVIDIA, combining NVIDIA GPUs to launch SoC offerings for AI PCs, aiming to blunt AMD's competitive pressure**.

**2.2 Data Center & AI**

**Q1 2026 Data Center & AI revenue was $5.05bn, +22% YoY.** Growth accelerated on stronger AI server CPU demand.

**The segment had hovered around $4bn, but as AI emphasis shifts from training to inference, server CPU demand has improved markedly**.

Training prioritized raw compute, where CPUs mattered less; inference prioritizes latency, where **CPUs manage scheduling and pre-processing, directly affecting throughput, latency and efficiency**.

**With limited progress in GPUs, Intel's Data Center & AI remains CPU-centric**. As workloads shift to inference, higher server CPU demand and 10–15% price hikes should sustain growth.

Following the NVIDIA tie-up, Intel deepened collaboration with Google, meaning both AI leaders will source server CPUs from Intel. **Despite in-house CPU efforts, strong x86 demand in the enterprise keeps the door open for Xeon growth**.

Beyond CPUs, **Google and Intel will co-develop IPUs (akin to NVIDIA's DPUs) to offload network, storage and security**. This **frees CPUs for agent orchestration and other high-value logic, easing CPU load**.

Regarding Google's **TPU v8 'TPU Direct Storage'**, which writes data from Google-managed storage directly into HBM and bypasses traditional CPU hops, **this is not a weakening of CPUs but allows them to focus on complex model logic, tool use and feedback loops**.

**2.3 Intel Foundry**

**Q1 2026 foundry revenue was $5.42bn, +16% YoY.**

**Intersegment eliminations totaled $5.25bn, implying external foundry revenue of about $170mn (~3%). Foundry remains largely internal-facing, with limited third-party revenue**.

The CEO has prioritized foundry as a core growth engine. U.S.-based capacity is a structural advantage, which has drawn policy support and capital from partners.

**Foundry revenue still skews to Intel 7, while 18A entered volume in 2H25 and is currently used for Panther Lake**. **18A still trails TSMC on density, but Panther Lake's launch shows Intel's return to leading-edge competition**.

**Intel has long lacked a marquee external foundry customer, with capacity mostly for internal use. The 'Terafab' project with Tesla, SpaceX and xAI revives hopes for external foundry traction**.

Tesla disclosed that 'Terafab' is expected to adopt Intel's 14A node. Based on Intel's roadmap, 14A volume is targeted around 2028.

**If ramped successfully, Intel would gain crucial validation and could attract more clients. With most leading-edge orders concentrated at TSMC, a credible alternative from Intel could secure second-source positions and expand growth**.

<End\>

**Dolphin Research on Intel: prior coverage**

Jan 23, 2026 call notes: [Intel (Trans): No foundry customers announced; still facing supply constraints](https://longportapp.cn/en/topics/38043009)

Jan 23, 2026 earnings take: [Intel: AI CPUs in the spotlight, but a 'cold' guide tempered expectations](https://longportapp.cn/en/topics/38039144)

Oct 24, 2025 call notes: [Intel (Trans): 18A to contribute profit by end-2026](https://longportapp.cn/en/topics/35557110)

Oct 24, 2025 earnings take: [Intel: Losses narrowed; can 'U.S.-style SMIC' poach from TSMC?](https://longportapp.cn/en/topics/35553498)

Sep 19, 2025 flash note: [Intel: Grabbing on to NVIDIA's thigh — who wins?](https://longportapp.cn/en/topics/34250810)

Jul 25, 2025 call notes: [Intel (Trans): 18A peak output around 2030](https://longportapp.cn/en/topics/32224751)

Jul 25, 2025 earnings take: [Intel: After deep cuts, is a 'U.S.-style SMIC' the endgame?](https://longportapp.cn/en/topics/32216970)

Apr 25, 2025 call notes: [Intel (Trans): Full-year capex cut to $18bn from $20bn](https://longportapp.cn/en/topics/29147681)

Apr 25, 2025 earnings take: [Intel: Selling assets and cutting headcount — can a leadership change save it?](https://longportapp.cn/en/topics/29144888)

Jan 31, 2025 call notes: [Intel (Trans): Foundry breakeven by end-2027](https://longportapp.cn/en/topics/26912777)

Jan 31, 2025 earnings take: [Intel: Cost cuts show results, but growth remains hard](https://longportapp.cn/en/topics/26911627)

Risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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