Intel reports 25% Q2 revenue growth as gross margin recovers to 40.4%
Second-quarter results show marked improvement in profitability and data center growth, though GAAP earnings remain negative; Intel forecasts a return to profitability in Q3.
Based on a filing dated .
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On August 12, Intel reported second-quarter 2026 revenue of $16.1 billion, up 25% year-over-year from Q1's $13.6 billion. Non-GAAP earnings per share were $0.42 against Q1's $0.29, while GAAP EPS remained negative at $(2.16) against $(0.73) in the prior quarter.
GAAP gross margin reached 40.4%, up 12.9 percentage points year-over-year, and non-GAAP gross margin was 41.8%, up 12.1 percentage points year-over-year. For Q3, Intel forecasted GAAP EPS of $0.31 and non-GAAP EPS of $0.38 on revenue between $15.8 billion and $16.8 billion—signaling a return to GAAP profitability after two consecutive quarters of losses.
Data Center and AI revenue grew 59%
Intel's Data Center and AI segment revenue reached $6.3 billion in Q2, up 59% year-over-year from $5.1 billion in Q1. Intel Xeon 6 was selected as the host CPU for NVIDIA's DGX Rubin NVL8 systems. Intel and Google announced a multiyear collaboration for continued deployment of Intel Xeon processors across Google's workload-optimized instances, including the latest Intel Xeon 6 processors powering C4 and N4 instances. Intel 18A-P entered risk production on schedule, and Xeon 6+ launched as Intel's first server-class product built on Intel 18A.
Client segment revenue growth on AI positioning
The Client Computing Group was renamed Client Computing and Physical AI Group (CCPG) in Q2. Revenue for the renamed unit reached $8.9 billion in Q2, up 13% year-over-year, compared with $7.7 billion and 1% growth in Q1. Over 130 customers are adopting or testing Intel Core Ultra Series 3 and Core Series 3 processors for edge AI and robotics applications. Intel introduced Arc G-Series processors designed for next-generation handheld gaming systems and Ethernet E835 network processors scaling from 10GbE to 200GbE.
Manufacturing expansion and partnership activity
Intel Foundry revenue was $5.8 billion in Q2, up 31% year-over-year from $5.4 billion in Q1. The unit achieved high-volume manufacturing of Intel Core Ultra Series 3 (Panther Lake) using ASML's EXE High NA EUV technology and expanded assembly and test capacity in Penang, Malaysia. Intel announced a €5 billion investment to expand manufacturing capacity and increase production of Intel Xeon 6 and next-generation Intel Xeon processors built on Intel 3.
Intel and SambaNova and Foxconn demonstrated production-ready rack-scale infrastructure for inference and agentic workloads. Intel and SambaNova announced the blueprint for a heterogeneous hardware solution combining GPUs, SambaNova RDUs, and Intel Xeon 6 processors as the host and action CPUs. Vector Core Compute unveiled disaggregated agentic cloud combining Intel Xeon processors, SambaNova RDUs, and NVIDIA Blackwell GPUs. Intel joined the Terafab project as a strategic partner alongside SpaceX, xAI, and Tesla, and expanded collaboration with Google Cloud to scale AI capabilities across Intel's workforce.
Capital structure and cash flow
Intel generated $7.0 billion in cash from operations in Q2, against $1.1 billion in Q1. Intel announced a $15 billion underwritten public offering on August 10, with proceeds intended for general corporate purposes, which may include capital expenditures and working capital. Underwriters hold a 30-day option to purchase $2.25 billion in additional shares at the public offering price.
R&D and marketing, general and administrative spending fell to $4.5 billion GAAP and $4.0 billion non-GAAP in Q2, down 6% and 8% year-over-year respectively.
Leadership changes
Intel appointed Pushkar Ranade as chief technology officer, Seok-Hee Lee to lead advanced packaging, and Aparna Bawa to lead global legal, ethics, compliance, people, and culture. Alex Katouzian was appointed to lead the Client Computing and Physical AI Group. Headcount was 82.3 thousand as of June 27, consisting of 77.6 thousand Intel employees and 4.7 thousand from Mobileye and other subsidiaries.