Intel's latest earnings report for Q2 2026 indicates a marked improvement in the company's financial standing and operational outlook compared to a year prior. Revenue, profit margins, and earnings per share have all surpassed expectations, signaling a positive shift in the company's trajectory. The Foundry business, Intel's chip manufacturing division, also demonstrated progress, defying earlier concerns about its viability.
During a year ago, when CEO Lip-Bu Tan took the helm, the future of Intel's cutting-edge process nodes, particularly the 14A process, was uncertain, contingent on securing a major customer or meeting specific development goals. Tan had previously stated "no more blank checks" for these initiatives. However, his tone regarding the Foundry business has since become considerably more optimistic. "My confidence in our foundry process roadmap has grown significantly since joining over a year ago," Tan stated during the recent earnings call. "I am more confident than ever of the strategic in significant and unique value proposition of Intel Foundry." He further elaborated that Intel's factories, utilizing Intel 7, Intel 3, and Intel 18A processes, exceeded internal volume targets in Q2. This success was attributed to improved yields, reduced cycle times, and an increase in wafer starts.
Improvements in the 18A process are particularly noteworthy, as this node is intended for upcoming Core Ultra 3 Panther Lake chips. Recent developments have reportedly addressed wafer-to-wafer variability issues, which would significantly benefit performance. There are also unconfirmed rumors suggesting that Nova Lake desktop processors may return to production using Intel 18A, after initially being planned for TSMC, the same foundry currently used for Arrow Lake chips.
Looking ahead, Tan expressed encouragement regarding the 14A process, Intel's next major advancement in chip production. This node is reportedly on track for risk production in the latter half of 2027 and high-volume production in 2028, though it will be some time before it appears in consumer gaming PCs. "Defect density and transistor performance are all outpacing 18A development," Tan noted about the 14A process.
Despite the operational advancements, the Foundry division incurred an operating loss of $2.1 billion in the second quarter. However, this represents an improvement of $348 million compared to the previous quarter, indicating a narrowing of losses.
Intel's overall financial performance saw a substantial increase, with CFO David Zinsner reporting revenue of $16.1 billion for Q2, up from $13.6 billion in Q1 and a 25% increase year-over-year. This marks Intel's strongest growth since 2011. The company's Q2 2025 revenue was $12.9 billion, a period characterized by less optimistic pronouncements from company leadership and significant workforce reductions.
In the recent earnings call, Tan acknowledged the efforts of Intel employees and conveyed renewed enthusiasm for both the Foundry business and the company's product lines. "Our advanced packaging and wafer foundry capabilities become increasingly vital assets," Tan remarked. "Our strategy is showing early results, and I'm confident that Intel is well positioned to help define the next era of computing."
The Client Computing and Physical AI Group (CCPG), which encompasses chips for gaming PCs, generated $8.9 billion in revenue. This figure is up 15% from the prior quarter and exceeded expectations, according to Zinsner. This segment's performance is occurring amidst a broader memory crisis impacting the PC hardware market.
Despite exceeding wafer output expectations, Zinsner noted that demand continues to outstrip supply, particularly for CPUs. "It's important to note that despite exceeding our expectations for wafer outs in the quarter, strengthening demand continues to outstrip our growing supply," he stated. While growth is anticipated in server chips later in the year, client-side demand, including for gaming components, is projected to soften due to the ongoing memory crisis. Zinsner indicated that Intel plans to pivot production towards CPUs and data centers to address the significant gap between supply and demand. This situation, while unfavorable for consumers seeking gaming hardware, signals strong demand for Intel's Foundry services.
The overall sentiment surrounding Intel appears considerably more positive than it did a year ago. While the company still faces competition from TSMC, AMD, and Nvidia, the dire predictions of a potential sale to competitors that circulated in 2024 no longer seem as prevalent. The company is no longer signaling large-scale employee changes, and it has recently secured a new customer for its Foundry service in Fortinet.