INTC released its Q2 2026 results (quarter ended Jun 2026) after U.S. market close on Jul 24 Beijing time. Key takeaways below.

1) Core metrics: $Intel(INTC.US) delivered revenue of $16.1bn (+25% YoY), well above company guidance ($13.8–14.8bn). Growth was driven by Client Computing and Data Center & AI, with CPU price hikes the largest contributor.

GPM came in at 40.4%, beating the street (37.6%). While the company had guided a sequential decline, stronger-than-expected price increases offset early 18A ramp dilution and lifted margins.

2) Opex discipline: Core opex (R&D + SG&A) was $4.54bn, down in ratio to 28% this quarter. Cost control continued to improve alongside mix and pricing.

Headcount reduction remained on track, with total employees down to 82.3k, -900 QoQ. The prior target was to reach 75k by end-2025, and further cuts may follow.

3) Biz mix: After disclosure changes, the bulk of revenue still comes from Client Computing and Data Center & AI. Together they account for over 90% of total.

a) Client Computing: revenue of $8.88bn (+12.8% YoY). Growth was largely price-led, partly from richer product mix and partly from direct price increases.

With global PC shipments turning down again this quarter, demand remains soft. Pricing strength appears driven by capacity squeeze, as data center CPUs crowd out legacy CPU capacity and push PC CPU prices higher.

b) Data Center & AI: revenue of $6.26bn (+59% YoY). The business remains centered on data center CPUs, with growth fueled by stronger Xeon demand and price hikes (estimated at 10–20%).

c) Intel Foundry: revenue of $5.77bn (+30.5% YoY). External foundry revenue was around $300mn this quarter, with the segment largely serving internal Intel products.

The latest 18A node is primarily used for Intel’s own Panther Lake. While 18A still trails TSM in transistor density, yield improvements could position it as a viable backup option for downstream customers.

4) Q3 outlook: INTC guides Q3 2026 revenue at $15.8–16.8bn (+15–23% YoY), above the street ($15.5bn). Q3 2026 GPM is guided at 41%, above the street (39.3%).

Dolphin Research view: Pricing props earnings; foundry sets the multiple

INTC posted a strong quarter, with both revenue and margins beating expectations. Client growth was entirely price-driven, underscoring still-weak end-demand.

Intel’s wafer capacity remains predominantly allocated to internal products. External foundry revenue was about $300mn, roughly 5% of foundry segment revenue.

Beyond the print, management added: ① Keeping quarterly GPM above 40% is the top financial goal this year. ② 2026 capex will be raised to over $20bn (up ~$3bn vs. prior), both signaling confidence in operations.

The market is focused on progress in the following areas:

a) CPU share: the core earnings base

INTC and AMD form an effective duopoly in CPUs, with INTC still leading in overall share. AMD’s CPU+GPU combo has been steadily chipping away, narrowing the gap.

In server CPUs, INTC’s share has been squeezed below 80%. This quarter’s Data Center & AI growth was driven by stronger end-demand for server CPUs and price hikes (10–20%).

The quarter’s upside was largely CPU-led, with client growth purely price-driven. The market still worries about two issues: ASP headroom and potential customer pushback, and how INTC defends share against intensifying competition.

b) Foundry progress: the core narrative for the valuation multiple

① 18A: yields are improving by ~7% per month and have entered full-rate mass production, primarily for Panther Lake.

② 14A: risk production is slated for H2 2027, with mass production in 2028, broadly in line with TSM’s A14 timing. PDK v0.5 has been released, with v0.9 targeted for Oct 2026.

With U.S. onshore advantages, investors believe INTC can secure ‘overflow orders’ from major customers, supporting a higher multiple. INTC has announced partnerships with NVDA and GOOG, but the market wants substantive 14A/18A external orders and revenue contributions from large customers.

At a market cap of $500.5bn, INTC implies ~35x 2027 non-GAAP core earnings (Est.), assuming revenue CAGR of 17.5%, non-GAAP GPM of 43.5%, and a 10% tax rate. The multiple is clearly rich vs. TSM (~17x PE), embedding expectations for ongoing CPU strength and foundry upside.

Broader AI capex worries have driven a notable pullback across AI infra. The steepest declines are in the ‘pricing beneficiaries’ chain; for INTC, client upside is largely pricing, while server CPUs benefit from both volume and price (price uplift ~10–20%), not just price alone.

CPU remains the core earnings base, and the current pricing cycle provides tangible support. The real valuation optionality lies in external foundry progress, especially landing large 14A/18A orders and revenue from marquee customers.

INTC’s CPUs are still a branch of the AI capex chain, so persistent capex fears can pressure the stock. With U.S. onshore advantages, only a breakthrough in external foundry can drive an independent rerating in a ‘fragile market’, restoring both the multiple and confidence.

Below is Dolphin Research’s detailed breakdown on INTC:

I. Core data: CPU price hikes are the key driver

1.1 Revenue: Q2 2026 revenue was $16.1bn (+25% YoY), beating the street ($14.75bn). Growth was powered by Client and Data Center & AI, with price increases the dominant factor.

1.2 GP and GPM: GP was $6.5bn (+25% YoY). GPM reached 40.4%, up 100bps QoQ, beating the street (37.6%). CPU price hikes offset 18A ramp dilution and supported margin recovery.

The company guides next quarter GAAP GPM at 41%, above the street (39.3%). Management’s primary financial goal this year is to keep GPM consistently above 40%, signaling operating confidence.

1.3 Opex: Core opex in Q2 2026 was $4.54bn (-6% YoY). ① R&D was $3.37bn (-8.6% YoY). ② SG&A was $1.18bn (+2.7% YoY).

Layoffs and cost cuts continued, with headcount down again to 82.3k, -900 QoQ. The company previously targeted 75k by end-2025 and may cut further.

1.4 Net income: INTC reported a Q2 2026 net loss of $11.0bn, mainly due to non-operating fair-value changes.

Note: In Aug 2025, under the CHIPS Act ‘Secure Enclave’ arrangement, the U.S. Dept. of Commerce prepaid about $5.7bn to INTC, for which INTC placed certain shares into custody. These custodied shares are excluded from equity and measured at fair value.

Operationally, core operating profit (non-GAAP) was about $1.97bn, which better reflects underlying performance. The sharp improvement was driven by CPU pricing and margin expansion.

Note: Core operating profit = GP − R&D − SG&A. In other words, GP less R&D and SG&A.

II. Segment details: With AI capex fears, foundry is the true unlock

INTC adjusted its disclosure. Intel’s own-product businesses are split into Client Computing and Data Center & AI, with wafer foundry and ‘all other’ reported separately.

Networking and Edge is no longer standalone; ‘other’ now mainly includes IMS and early-stage projects. Client and Data Center remain the largest revenue drivers.

Given foundry and internal offsets, INTC still mostly produces for itself, with external foundry revenue very limited (about 3% of total this quarter).

2.1 Client Computing

Client revenue in Q2 2026 was $8.88bn (+12.8% YoY). Growth was mainly price-led, not a demand recovery.

Note: In Q1 2025, the company reclassified, moving part of former Networking & Edge into Client.

IDC estimates global PC shipments at 68.2mn units this quarter, back to decline. Against this backdrop, INTC’s client revenue rose 12.8% YoY, chiefly on CPU price increases: partly mix, and partly direct price hikes (consumer CPU price up close to ~10%).

2.2 Data Center & AI

Data Center & AI revenue in Q2 2026 was $6.26bn (+59% YoY). Growth accelerated on AI server CPU demand.

The segment had hovered around ~$4bn for some time. As the model focus shifts from training to inference, server CPU demand improved markedly since H2 2025.

In inference, CPUs handle resource orchestration and data pre-processing, materially affecting throughput, latency, and efficiency. This has driven both volume and price in server CPUs within Data Center & AI.

For this quarter’s Data Center & AI growth split, Dolphin Research estimates price contributed ~20% and volume ~40%. The remainder reflects mix and product effects.

AI capex concerns have pressured this area and the broader ‘pricing chain’. INTC’s print and guide suggest CPU demand remains healthy, helping stabilize confidence in a fragile market.

On hyperscaler collaboration: ① Deeper work with NVDA to offer x86 server CPU choices. ② With GOOG, co-developing IPU (akin to NVDA’s DPU) to offload networking, storage, and security tasks from the CPU.

2.3 Intel Foundry

Wafer foundry revenue was $5.77bn in Q2 2026 (+30% YoY).

Internal offsets across segments totaled $5.48bn; external foundry revenue was about $300mn (~5% of foundry revenue). Current foundry activity largely serves internal needs, with limited external contribution.

Management has explicitly pivoted to prioritize foundry growth, making it a key pillar for INTC’s renewal. Intel’s U.S. onshore manufacturing is a structural advantage and a core reason the U.S. Gov. sought support from partners such as SoftBank and NVDA.

18A entered volume in H2 2025 and currently serves Panther Lake. 18A still lags TSM in transistor density, but Panther Lake’s launch signals INTC’s return to leading-edge competition.

With ongoing AI capex uncertainty, external foundry can provide alpha-like growth. Publicly disclosed large external work includes supplying 14A for Musk’s Terafab project (Tesla/SpaceX), with 14A mass production targeted around 2028.

In this fragile environment, the market wants certainty. External foundry revenue at ~$300mn is still too small; only firm orders and revenue from large customers will demonstrate true ‘landing’ and unlock larger growth.

<End of report>

Dolphin Research coverage on INTC (history):

Apr 24, 2026 call recap ‘INTC (Trans): 18A yields above internal plan; server CPUs to sustain double-digit growth’

Apr 24, 2026 earnings review ‘INTC: Leaving the ‘darkest’ moment; the incumbent strikes back’

Jan 23, 2026 call recap ‘INTC (Trans): No disclosed foundry customers yet; still facing supply constraints’

Jan 23, 2026 earnings review ‘INTC: AI CPUs in the spotlight, but a ‘cold’ guide tempered expectations’

Oct 24, 2025 call recap ‘INTC (Trans): 18A expected to contribute profits by end-2026’

Oct 24, 2025 earnings review ‘INTC: From losses to recovery! Can a ‘U.S.-style SMIC’ poach TSM talent?’

Sep 19, 2025 quick take ‘INTC: Grabbing NVDA’s ‘big leg’, who really wins?’

Jul 25, 2025 call recap ‘INTC (Trans): 18A output to peak around 2030’

Jul 25, 2025 earnings review ‘INTC: After big layoffs, is a ‘U.S.-style SMIC’ the end game?’

Apr 25, 2025 call recap ‘INTC (Trans): Full-year capex cut from $20bn to $18bn’

Apr 25, 2025 earnings review ‘INTC: Selling assets with one hand, layoffs with the other; can a leadership change save the day?’

Jan 31, 2025 call recap ‘INTC (Trans): Foundry services to break even by end-2027’

Jan 31, 2025 earnings review ‘INTC: Layoffs and cost cuts show results, but growth remains tough’

Risk disclosure and statement: Dolphin Research disclaimer and general disclosure