Intel delivered a stronger-than-expected revenue forecast for the second quarter on Thursday, signalling a notable turnaround driven by surging demand for its server processors used in artificial intelligence data centers. The upbeat guidance immediately lifted investor sentiment, sending the company’s shares up 15% in extended trading and adding roughly $49 billion to its market value. The rally extends an already impressive 81% gain in its stock this year.
For the second quarter, Intel projected revenue in the range of $13.8 billion to $14.8 billion, comfortably ahead of analysts’ estimates of about $13.07 billion compiled by LSEG. The company also issued adjusted earnings per share guidance of 20 cents, significantly outperforming expectations of 9 cents.
The results point to a broader recovery narrative for a company that for years struggled with strategic missteps that left it trailing competitors in the fast-growing artificial intelligence semiconductor race. Under CEO Lip-Bu Tan, Intel has embarked on an aggressive restructuring strategy aimed at restoring competitiveness through cost-cutting measures, asset divestments, and workforce reductions, while also strengthening its balance sheet.
The turnaround effort has also been supported by a series of strategic partnerships and investments involving major players such as the U.S. government, SoftBank, and Nvidia, providing both capital support and renewed confidence in Intel’s long-term direction.
CPU demand finds new momentum in AI era
While Nvidia and other rivals initially dominated the AI boom through graphics processing units (GPUs), Intel is now positioning itself to benefit from a shifting phase of artificial intelligence deployment. As cloud providers transition from training AI models to running them at scale, demand is growing for central processing units (CPUs), which are better suited for inference workloads and autonomous AI agents.
“CPU having a renaissance,” Intel’s finance chief Dave Zinsner noted in a recent interview, highlighting the company’s expectation that it will become a meaningful beneficiary of AI-related infrastructure investment.
This shift has helped reshape Intel’s growth outlook, with management pointing to stronger pricing power as another driver of its improved revenue forecast. However, executives acknowledged that meeting rising demand will depend heavily on the company’s ability to scale manufacturing without encountering production bottlenecks.
Strategic deals and manufacturing push
Intel also secured a notable win in its foundry ambitions, revealing that Tesla has become its first major customer for the advanced 14A chip manufacturing process tied to its “Terafab” project in Austin, Texas—an initiative envisioned as a major AI chip production hub linked to Elon Musk’s broader robotics and computing ambitions.
Although financial details of the deal remain undisclosed, the partnership is seen as an important signal of confidence in Intel’s effort to reposition itself as a competitive contract chip manufacturer.
The company’s foundry division reported $5.4 billion in first-quarter revenue, with most of it still coming from Intel’s internal operations, alongside a small portion from legacy external clients.
Intel has also expanded collaborations in the AI infrastructure space, including deepening ties with Alphabet’s Google and participating in emerging AI manufacturing initiatives alongside SpaceX and Tesla.
Strong data center performance drives earnings beat
Intel’s latest results also showed stronger-than-expected performance in its core data center and AI segment, which generated $5.1 billion in revenue—surpassing analyst expectations of $4.41 billion. Overall first-quarter revenue reached $13.58 billion, ahead of projections.
Despite the revenue strength, the company reported a first-quarter loss of 73 cents per share, largely driven by more than $4 billion in restructuring charges. On an adjusted basis, however, Intel posted earnings of 29 cents per share, far exceeding expectations.
High stakes ahead in semiconductor race
Even with recent gains, Intel remains under pressure in a highly competitive landscape dominated by Nvidia, Advanced Micro Devices, and Arm, all of which continue to push deeper into AI and data center markets.
Analysts describe Intel’s transformation as a high-risk, high-reward bet on its ability to evolve from a legacy chipmaker into a leading foundry competitor capable of challenging Taiwan Semiconductor Manufacturing Company (TSMC) by the end of the decade.
If successful, analysts argue, Intel could emerge as a diversified semiconductor powerhouse positioned to benefit from the next wave of AI-driven computing—spanning robotics, autonomous systems, and large-scale AI infrastructure.
For now, the market is rewarding early signs of recovery, but the company’s long-term trajectory will depend on execution in manufacturing, sustained demand for CPUs, and its ability to keep pace in an increasingly crowded AI semiconductor race.