Intel NASDAQ: INTC executives said first-quarter results topped the high end of guidance as demand for the company’s products continued to run ahead of supply, led by strength in server CPUs tied to AI infrastructure build-outs. CEO Lip-Bu Tan said revenue, gross margin and earnings per share all exceeded guidance, marking “our sixth consecutive quarter of exceeding financial expectations,” while CFO David Zinsner cited “strong demand and better-than-expected available supply,” along with mix and pricing actions.
Q1 results beat guidance as demand outpaced supply
Zinsner reported first-quarter revenue of $13.6 billion, which he said was $1.4 billion above the midpoint of Intel’s outlook. He added that revenue “would have been meaningfully higher, but demand continues to outpace our growing supply.”
On profitability, Zinsner said Intel’s non-GAAP gross margin was 41%, about 650 basis points ahead of guidance, driven by higher volume (including sales of previously reserved inventory), mix and pricing. He also pointed to “better yields on Intel 18A” offsetting some early-node ramp costs. Non-GAAP EPS was $0.29 versus guidance of breakeven, helped in part by a roughly $0.06 one-time gain in interest and other, he said.
Cash generation remained pressured by capital spending. Zinsner reported operating cash flow of $1.1 billion, gross CapEx of $5 billion, and adjusted free cash flow of -$2 billion in the quarter.
CPU demand strengthens as AI shifts toward inference and “agentic” workloads
Tan framed the quarter against what he described as a shift in AI computing needs. He said AI is moving into “more distributed inference and reinforcement learning workloads like agentic, physical AI, and robots and edge AI,” and argued this is helping reassert the CPU’s role in AI systems.
In recent months, Tan said Intel has seen “clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era,” describing the CPU as “the orchestration layer and critical control plane for the entire AI stack.” During Q&A, he cited customer feedback that CPUs become more efficient and more central as workloads move from training to inference, and he described a change in the CPU-to-accelerator deployment ratio from “1 to 8” toward “1 to 4,” and potentially “towards parity or even better.”
Tan highlighted production ramps for new products, saying Intel 3-based Xeon 6 and Intel 18A-based Core Series 3 were in “full volume production ramp,” calling them the company’s fastest new product ramps in five years.
Segment performance: CCG, DCAI, Foundry, and “All other”
- Client Computing Group (CCG): Zinsner said CCG revenue was $7.7 billion, down 6% sequentially but better than Intel expected. He said AI PC revenue grew 8% sequentially and now represents “greater than 60%” of Intel’s client CPU mix. Operating profit was $2.5 billion, or 33% of revenue, aided by mix, previously reserved inventory, better 18A yields and lower operating expenses. Zinsner also described Core Ultra Series 3 as Intel’s “strongest product launch in five years.”
- Data Center and AI (DCAI): DCAI revenue was $5.1 billion, up 7% sequentially and 22% year-over-year, which Zinsner said was “well above expectations.” He said Intel saw strong ASIC growth, with revenue up more than 30% sequentially and nearly doubling year-over-year. Operating profit was $1.5 billion, or 31% of revenue. Zinsner said Intel signed multiple long-term agreements, including with Google, and noted Xeon 6 was selected as host CPU for NVIDIA’s DGX Rubin NVL8 systems. Intel also announced a multi-year collaboration with SambaNova to design a heterogeneous AI inference architecture combining SambaNova RDUs with Intel Xeon 6.
- Intel Foundry: Foundry revenue was $5.4 billion, up 20% sequentially, driven by Intel 3 EUV wafer mix and “significant growth in 18A,” Zinsner said. External foundry revenue was $174 million. The segment posted an operating loss of $2.4 billion, improving $72 million sequentially on better yields, partly offset by higher operating expenses tied to “an intentional step-up in Intel 14A investments.”
- All other: Revenue was $628 million, up 9% sequentially on a strong Mobileye quarter, and operating profit was $102 million, according to Zinsner.
On custom silicon, Tan characterized Intel’s ASIC efforts as “purpose-built silicon optimized for specific workload.” Zinsner added that observers may be “surprised” by its current scale, calling it “at a run rate that’s north of $1 billion already.”
Foundry progress: 18A yields, 14A engagement, advanced packaging, and Terafab partnership
Tan said Intel Foundry has made “steady progress with Intel 4 and Intel 3,” while 18A yields are running ahead of internal projections, calling it “a meaningful inflection.” Zinsner said yields on 18A improved enough that Intel expects to hit Tan’s end-of-year yield target “the middle of this year,” though he declined to provide specific yield figures.
Tan also discussed Intel’s next nodes, saying external engagement on 18A-P and 14A is encouraging and that “Intel 14A maturity yield and performance are outpacing Intel 18A at a similar point in time.” He said Intel expects “earlier design commitments” to begin emerging in the second half of 2026 and expand into the first half of 2027, and added that Intel plans to run more of its own future products on 14A.
Intel executives also emphasized advanced packaging as a differentiated growth driver. Zinsner said customer demand has exceeded his prior expectations, describing a shift from thinking opportunities would be “in the hundreds of millions of dollars” to seeing demand “more in the billions of dollars per year kind of level.” He said Intel expects advanced packaging gross margins to be at least at Foundry average over time.
On the company’s newly announced partnership with SpaceX, xAI and Tesla to support “Terafab,” Tan said he and Elon Musk share a belief that global semiconductor supply is not keeping pace with demand and said the collaboration will explore “innovative ways to refactor silicon process technology” to improve manufacturing efficiency. He did not detail commercial structure, saying the relationship is broad and Intel will update investors “as we go.”
Q2 guidance, PC caution, and capital allocation updates
For the second quarter, Zinsner guided revenue to $13.8 billion to $14.8 billion. At the midpoint, Intel expects non-GAAP gross margin of 39%, a tax rate of 11%, and non-GAAP EPS of $0.20. He said the margin step-down is due to a larger contribution from Intel 18A early in its ramp and inventory benefits in Q1 that are not expected to repeat in Q2.
While order patterns remain “very robust,” Zinsner said Intel is “prudently planning for PC demand to weaken in the second half” and expects the full-year PC unit TAM to be down “low double-digit %.” By contrast, he said Intel’s outlook for server CPU demand has improved over the past 90 days, with expectations for “a strong year of double-digit unit growth” for both the industry and Intel, with momentum extending into 2027.
On spending, Zinsner said Intel now expects 2026 capital expenditures to be flat year-over-year (versus prior expectations of flat to down) reflecting capacity investments to support committed demand. In Q&A, he added that tool spending will be up “25% or so” year-over-year, while spending on facility space is expected to decline.
Zinsner also said Intel recently closed a transaction to repurchase a 49% equity interest in the joint investment in Fab 34 in Ireland, funded with approximately $7.7 billion in cash and $6.5 billion in new debt. He said Intel expects non-controlling interest to net to about $250 million in each of Q2, Q3, and Q4 on a GAAP basis, and to be about $1.1 billion for 2027 and 2028. Excluding the Fab 34 buyout, Intel still expects positive adjusted free cash flow for the full year, he said.
Tan closed the call by describing 2026 as “the year of execution,” pointing to priorities including yield, productivity and cycle-time improvements as Intel works to close the supply gap and meet demand.
About Intel NASDAQ: INTC
Intel Corporation, founded in 1968 by Robert Noyce and Gordon E. Moore and headquartered in Santa Clara, California, is a leading global designer and manufacturer of semiconductor products. The company is historically notable for introducing the first commercial microprocessor and for driving the x86 architecture that underpins many personal computers and servers. Intel's core business spans the design, fabrication and marketing of processors, chipsets and related components for a wide range of computing applications.
Intel's product portfolio includes client and mobile processors marketed under brands such as Intel Core and Pentium, as well as high-performance Xeon processors for data centers and cloud infrastructure.
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