Intel Earnings Reveal Whether the Chip Selloff Created a Buy

Intel Earnings Reveal Whether the Chip Selloff Created a Buy Written by Chris Markoch | Reviewed by Clare Titus July 24, 2026 Share Link copied to clipboard. Key Points Intel reported Q2 2026 revenue of $16.1 billion, up 25% year-over-year, and adjusted EPS of 42 cents, both well above analyst estimates, sending shares sharply higher after hours. Data Center and AI Group revenue grew 59% year-over-year, and management said demand still outstrips supply due to substrate and memory shortages, suggesting AI demand remains intact. Intel Foundry revenue rose 31%, but external customers accounted for only about 5% of segment revenue, leaving its leading-edge 18A business largely unproven despite raised guidance and capital spending. MarketBeat previews top five stocks to own in August . The importance of an earnings report has become almost overstated. However, it’s hard to understate what Intel Corporation NASDAQ: INTC faced heading into its Q2 2026 earnings report . The PHLX Semiconductor Index had fallen roughly 19% from its June 22 peak. Every constituent was in the red. Nearly $2 trillion in sector value had been erased. Intel Today INTC Intel $92.32 -7.91 (-7.89%) As of 07/24/2026 04:00 PM Eastern 52-Week Range $18.97 ▼ $142.35 Price Target $107.67 Add to Watchlist The sell-off happened because investors questioned whether AI infrastructure spending can justify the current multiples being assigned to chip stocks. Investors needed Intel's results to answer one question: Is this a healthy reset, or early proof that demand is cracking? Get Intel alerts: Sign Up The headline numbers from the report were encouraging. Revenue hit $16.1 billion, up 25% year-over-year, roughly $1.8 billion above the midpoint of guidance. It was also Intel's fastest growth rate since 2011. Adjusted earnings per share (EPS) of 42 cents doubled the 21 cents analysts expected. Gross margin expanded to 41.8%, nearly 280 basis points above management's own guide. The stock jumped as much as 12-13% after hours , briefly touching levels above $112. For a sector trading on fear all month, the earnings report seems to demand a repricing. But the details underneath still leave room for caution. Data Center Demand Looks Real, Not a Rebound Story The clearest signal was in the company’s Data Center and AI Group segment. Revenue jumped 59% year-over-year to $6.3 billion. Management said AI-linked businesses grew more than 70% year-over-year and now make up roughly 70% of total revenue. Chief financial officer (CFO) David Zinsner told analysts that server CPU demand has improved since last quarter. He pointed to double-digit industry unit growth through 2028. Intel also disclosed 10 long-term supply agreements with customers. Some customers want to lock in pricing. Others are focusing purely on securing volume. Here's why that matters. Intel said demand is still outstripping available supply. It cited industry-wide shortages of substrates and memory that are expected to persist into next year. That's a different story than the bear case behind July's sell-off, which centered on fears that hyperscalers might pull back AI capital spending. Intel's numbers argue that the bottleneck is hardware supply, not fading demand. Margins Are Recovering, But Foundry Still Isn't Fully Proven Margin recovery is another pillar of the bull case, and it's real. Non-GAAP gross margin came in at 41.8% compared to just 29.7% a year ago. For a chip company, that happens because of scale, a richer product mix, and disciplined pricing. Foundry is where caution still belongs. Intel Foundry revenue rose 31% to $5.8 billion. 18A wafer output grew more than 50% quarter-over-quarter, with yields ahead of internal targets. But external Foundry revenue was just $293 million, which was about 5% of the segment's total. The Foundry operating loss narrowed to roughly $2.1 billion but remains substantial. Intel landed Fortinet NASDAQ: FTNT as a named foundry customer this week. That's on an older node, though, not the leading-edge 18A business investors need validated. Until a marquee customer commits real volume to 18A or 14A, Foundry will still be a story of internal progress , not proven outside demand. Guidance Suggests the Beat Wasn't a One-Quarter Fluke Intel guided Q3 revenue to $15.8-$16.8 billion. It guided non-GAAP EPS to 38 cents. Both figures came in well above Wall Street's roughly $15.1 billion and 27 cents estimates. Management also raised its 2026 capital expenditure (CapEx) outlook from $18 billion to more than $20 billion, with 2027 spending set to climb further. This marks Intel's seventh straight quarter of beating its own outlook. That looks like a management team that has recalibrated expectations lower than what it can actually deliver. The Tougher Comp Problem Ahead Intel has now strung together two quarters of exceptional, AI-fueled growth. The Data Center and AI segment's 59% year-over-year jump follows strong growth last quarter. That makes the next few co