Intel Q2 Revenue Jumps 25% as Data Center Sales Rise 59%

Intel's Data Center and AI segment generated $6.3 billion, up 59% year over year. The company attributed the broader result to robust demand and improved execution, including higher factory yields and shorter cycle times that allowed more volume to ship.

Client Computing and Physical AI revenue rose 13% to $8.9 billion. Intel Products, which combines the client and data-center groups, produced $15.1 billion in segment revenue, up 28% year over year. Intel also launched Xeon 6+, its first server-class product built on the Intel 18A process, during the quarter.

The company reported non-GAAP diluted earnings of $0.42 per share. Its GAAP result was a loss of $2.16 per share, reflecting an $11.0 billion net loss attributable to Intel. Intel's release shows that the GAAP loss included $13.6 billion in mark-to-market losses on escrowed shares connected to its U.S. CHIPS Act agreement, while non-GAAP net income was $2.2 billion.

Intel Foundry revenue rose 31% year over year to $5.8 billion, but the segment posted a $2.1 billion operating loss. Management said higher yields, faster cycle times and greater factory scale improved wafer costs, while outside foundry revenue remained a small part of the segment.

For the third quarter, Intel forecast revenue of $15.8 billion to $16.8 billion, non-GAAP diluted EPS of $0.38 and a non-GAAP gross margin of 42%. Management also said demand continues to exceed available supply, particularly for server processors, and that production will be shifted toward data-center CPUs where possible.

For infrastructure teams, the quarter is evidence that AI deployment is increasing demand for the CPUs that coordinate data processing, storage and accelerator-heavy systems, not only for GPUs. The constraint to watch is execution: Intel must turn stronger demand and improving yields into sustained supply while reducing the cost of its foundry expansion.