Intel had a rough July. Its stock dropped 28% during the month, which is the kind of slide that makes even patient investors nervous. Then the company reported earnings after the bell, and everything flipped.
Revenue of $16.1 billion also blew past the $14.42 billion Wall Street had penciled in. The 25% growth rate is Intel's best quarter in nearly 15 years.
CEO Lip-Bu Tan summed it up simply: "AI is driving unprecedented demand for compute."
That demand showed up across Intel's business lines. The PC chip division - called the client computing group - brought in $8.9 billion, up 13%. The data center business was even stronger at $6.3 billion, a 59% jump. And Intel's foundry segment posted $5.8 billion in revenue, a 31% increase compared to the prior year's quarter.
Gross margin hit 42%. To put that in perspective, a year earlier gross margin was just 2.5%. That is not a typo. The company went from barely covering its costs to generating serious profit on every chip it sells.
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So far in 2026, Intel's stock is up more than 170% as of the July 23 close. But that number hides the wild ride.
The engine behind all this growth is artificial intelligence. AI data centers need powerful server processors to run the models, and Intel's chips are a big part of that buildout. Intel is catching a direct wave.
Intel's server CPU business signed 10 long-term agreements with customers for future orders. That is a lot of locked-in demand.
Intel's guidance for the current quarter suggests the momentum has legs. The company expects adjusted earnings of 38 cents per share, with revenue in the range of $15.8 billion to $16.8 billion. Analysts had been looking for $15.1 billion, so Intel is projecting a beat just by showing up.
The catch: Intel is not predicting growth everywhere. It anticipates that PC sales will remain unchanged in Q3 due to a memory shortage. That is a real headwind, and it could keep pressure on the stock if the shortage drags on.
The bigger story for investors to watch is Intel's foundry business. It has one named customer - Fortinet - using an older manufacturing process. That is a start, but not the kind of huge external win investors are hoping for.
The company plans to raise its capital spending significantly next year to build out its foundry capabilities. Becoming a go-to chipmaker for other companies takes years and billions of dollars.
For now, the AI boom is carrying Intel higher. The question is whether the company can turn that momentum into a stable, long-term business. For anyone holding Intel stock or thinking about buying in, the next few quarters will show whether this turnaround has real staying power or just a strong tailwind behind it.
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