Intel Corporation (NASDAQ:INTC) had its best quarter in nearly 15 years. The firm made $16.1 billion in sales, up 25% from a year ago, way more than the $14.42 billion analysts expected. Adjusted profit came in at 42 cents a share, double the 21 cents Wall Street expected. The stock jumped about 4-5% after hours. For the next quarter, Intel expects to make between $15.8 billion and $16.8 billion, well above the $15.1 billion analysts had guessed.
Why This Happened
Most of the AI boom so far has been about graphics chips, the kind Nvidia makes. Intel makes a different kind of chip, called CPUs, and those weren’t as central to the AI story until recently. That’s changing. A new wave of AI, called “agentic AI,” uses AI systems to actually carry out tasks, like writing computer code, on their own. Running that kind of AI needs a lot of CPU power too, and that’s exactly what Intel sells. The company’s data center chip sales jumped 59% this quarter. CEO Lip-Bu Tan said in a statement, “AI is driving unprecedented demand for compute.” Intel’s finance chief, David Zinsner, said the firm can’t make chips fast enough to meet demand right now, and he told analysts that “customers continue to signal a strong and sustainable spending environment.”
This isn’t Intel’s first sign of life this year either. The stock is up more than 154% in 2026 so far. But it’s also been a rough month, and shares fell 28% in July alone before this report, and they’re still down more than 25% from their record high set on June 22. So this jump is a bounce-back, not a stock making new highs.
That raises a real question. Is Intel’s turnaround actually happening now, or is this one good quarter inside a stock that’s still recovering from a much bigger recent drop?
The Bull Case
Intel Corporation (NASDAQ:INTC)’s own numbers back up a real recovery, not just AI hype. Its profit margin jumped to about 42%, up from just 2.5% a year ago because of agentic AI, which drove real demand growth in Intel’s data center chips. Intel sold more of those and also got better prices. Its PC business grew too, but from higher prices on fewer units sold, not from selling more chips.
Intel signed 10 long-term deals with data center customers, some locking in prices and some locking in how much they’ll buy, a sign customers are committing to Intel for years, not just this quarter. The company’s chip-manufacturing business, called its foundry, grew sales 31% and brought in $5.8 billion, beating expectations. Intel is now “fully committed” to a new, more advanced manufacturing process called 14A, something it had warned it might have to abandon just last year if it couldn’t find a big customer. It has already signed Tesla as a customer for that process, for a project called “Terafab.” Trump announced in April that Apple had agreed to have Intel make some of its chips too, though neither firm has directly confirmed that deal yet.
Bernstein analyst Stacy Rasgon summed up the mood on CNBC before this report even came out: “I am feeling better about Intel than I have in a long time.”
The Bear Case
The excitement still needs proof. Intel Corporation (NASDAQ:INTC) hasn’t landed one obvious, headline customer for its most advanced chipmaking process yet. The one new customer it announced this week, Fortinet, is using an older, less advanced manufacturing method to make security chips, not the cutting-edge process investors really want validated. The Apple deal is still unconfirmed by either company. Intel is also spending a lot more money to chase this growth: it just raised its spending plans for this year from $18 billion to $20 billion, and said spending will rise “meaningfully” again next year, with most of that going toward new factories. Zinsner also didn’t rule out selling more stock to raise cash, which could water down the value of shares investors already own, though he said there’s no specific plan for that right now. And Intel’s PC chip business, still its biggest by revenue, is expected to go flat next quarter because a shortage of memory chips, made by other companies, is raising costs and slowing PC sales.
Analyst Shay Boloor put the bar clearly: Intel’s stock can keep climbing only if it turns this quarter’s chip shortage into steady long-term growth and finally announces real outside customers for its most advanced factories.
Insider Monkey’s Hedge Fund Data Analysis
Insider Monkey’s hedge fund database shows real, growing confidence in Intel even before this report. 112 hedge funds held Intel Corporation (NASDAQ:INTC) stock at the end of Q1 2026, up from 96 the quarter before, worth $8.7 billion total, up from $7.0 billion. That’s a clear increase in both how many funds own it and how much they’ve put in, so a sign smart money was already buying into this turnaround story ahead of Thursday’s numbers.
Conclusion
Intel Corporation (NASDAQ:INTC)’s quarter was genuinely strong, not just a beat against low expectations. The AI-driven CPU demand is real, the margins prove it, and the foundry business is growing faster than expected. But the stock’s big jump this week is happening inside a much rougher month, down 28% in July before this report, and the two things investors want most, a confirmed major foundry customer and clear evidence the PC business can handle the memory shortage, still haven’t fully arrived. The next few quarters, not this one, will show whether Intel’s comeback is durable or just a short-term good bounce.
While we acknowledge the risk and potential of INTC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than INTC and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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