Intel reported its strongest quarter in recent years: in Q2 2026, the company’s revenue exceeded $16 billion, marking a 25% increase year-over-year. This represents the fastest growth rate since late 2011. Adjusted earnings came in at $0.42 per share—double the analyst consensus of $0.21.
Despite this, following the earnings release, Intel shares initially rose but then turned downward, deepening a decline of nearly 28% over the course of July.
The primary driver of growth was the data center and artificial intelligence solutions division, which saw revenue surge by 59% to over $6 billion. The client PC processor business grew by 13%, reaching nearly $9 billion, while the contract chip manufacturing (foundry) segment expanded by 31%, approaching $6 billion. Gross margin recovered to 42%, compared to less than 3% a year earlier, fueled by rising demand and the cost-cutting program implemented by Lip-Bu Tan.
The outlook for the third quarter also surpassed market expectations. Intel forecasts revenue in the range of $16–$17 billion, against an analyst estimate of roughly $15 billion, and anticipates adjusted earnings of $0.38 per share versus the expected $0.27. The company announced that it has secured 10 long-term contracts for contract chip manufacturing and is already experiencing supply constraints in its data center solutions segment—a situation Intel has not faced in years.
Nevertheless, investors remain skeptical about Intel’s ability to attract major clients for its most advanced manufacturing processes. So far, the only publicly named customer for its foundry business is Fortinet, which, however, uses a more mature chip fabrication technology. Intel also cautioned that PC processor sales may remain flat in the third quarter due to memory shortages. Ultimately, it is the prospects of the contract manufacturing business—not the current financial results—that continue to drive the market’s valuation of the company.
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