Intel Q2: AI Has Revived The CPU Franchise, But Foundry Has Not Earned Its Valuation

Intel Q2: AI Has Revived The CPU Franchise, But Foundry Has Not Earned Its Valuation

Intel delivered a strong Q2, with AI-driven CPU growth reviving its core franchise and driving robust operating leverage. Despite operational improvements, Foundry remains heavily loss-making and reliant on internal demand, with minimal external revenue traction. Valuation is demanding: current price assumes Foundry break-even and sustained DCAI profit growth even after supply normalizes. I rate INTC a Hold near $92, as real earnings recovery is offset by high capital requirements and unproven Foundry economics.

In its second quarter earnings, Intel (INTC) proved that AI has sharply improved its CPU franchise, but Intel Foundry is still lagging. Data Center and AI has grown rapidly, producing strong operating profit. Supply constraints and customer commitments are supporting