Key Takeaways:
Intel reports second-quarter earnings Thursday, with analysts expecting data center and AI revenue to drive a top-line beat as Xeon demand and hyperscaler deals fuel growth.
"Server demand has improved over the previous three months, with double-digit growth expected to run into 2027," Intel CFO David Zinsner said on the company's last earnings call, citing strength in the DCAI segment.
Wall Street expects Intel to post Q2 earnings per share of $0.22 on revenue of $14.4 billion, according to consensus estimates tracked by Refinitiv. That compares with a year-ago loss of $0.10 per share on revenue of $12.9 billion. Intel guided revenue in a range of $13.8 billion to $14.8 billion, with non-GAAP gross margin of 39% and EPS of $0.20 at the midpoint.
RBC Capital Markets, previewing Thursday's report, told clients to expect a 5 percent revenue beat, a 3 percent to 5 percent guidance raise, and gross margins 1 to 2 points above consensus, citing server-CPU strength. Susquehanna analyst Christopher Rolland raised his price target to $115 from $80 late last week, while TD Cowen's Joshua Buchalter lifted his to $115 from $75. Both maintained Hold ratings. HSBC took a more aggressive stance, boosting its target to $200 from $100 earlier this month.
Intel's DCAI segment generated $5.1 billion in revenue during Q1, up 22 percent year over year and 7 percent sequentially, as the shift from AI training to agentic workloads drove demand for its core data center CPUs. The CCG segment contributed $7.7 billion, with AI PC revenue accounting for more than 60 percent of client CPU sales. Non-GAAP gross margin reached 41 percent in Q1, benefiting from pricing actions, improved product mix, and better Intel 18A yields.
The stock has rallied 167 percent year to date but remains 33 percent below its June high after a broader semiconductor selloff erased recent gains. Shares traded at $102.53 Tuesday, up 6 percent on the session. The forward price-to-sales multiple of 8.28x sits 184 percent above Intel's five-year average of 2.91x, reflecting high expectations for the company's turnaround under CEO Lip-Bu Tan.
The Q2 print will test whether Intel's server momentum can offset management's warning of weaker PC demand in the second half due to rising memory costs. Investors will watch Thursday's call for updates on foundry customer commitments and capacity expansion plans.
This article is for informational purposes only and does not constitute investment advice.
