Shares of Intel moved greater after the chipmaker reported sturdy quarterly outcomes and offered an upbeat third-quarter outlook. We anticipate extra features forward beneath the steerage of CEO Lip-Bu Tan. Income within the second quarter elevated 25% yr over yr to $16.1 billion, exceeding the LSEG-compiled consensus estimate of $14.42 billion. Non-GAAP earnings per share (EPS) swung to a 42-cent revenue from a 10-cent loss one yr in the past, beating the LSEG estimate of 21 cents. Intel was up roughly 4% in after-hours buying and selling, bringing it to round $104 per share. It traded as excessive as about $113 in response to the outcomes. INTC 1Y mountain Intel 1-year return Backside line It is onerous to not be impressed by Lip-Bu Tan, who turned CEO in March 2025 and has already modified the corporate’s tradition whereas remodeling it from a cash loser to a worthwhile, rising operation. Alongside the way in which, Intel is regaining investor belief after years of disappointment. To be honest, a part of that success is tied to the unbelievable demand for AI infrastructure. Prospects cannot get sufficient of its x86 CPUs to run agentic AI duties. The superior packaging enterprise has turn out to be strategically essential within the AI period, connecting methods of a number of smaller chips in order that they act like a single chip. And the foundry enterprise gives a strategic benefit, permitting Intel to supply its personal AI CPUs with out counting on trade chief Taiwan Semiconductor Manufacturing Firm (TSMC). With these tailwinds at its again and beneath disciplined management, Intel exceeded its personal income steerage by $1.8 billion, and greater than doubled its personal Non-GAAP EPS forecast, reporting $0.42 versus the corporate’s $0.20 outlook. One slight disappointment this night was that the corporate didn’t announce any main prospects for its foundry. A number of massive names, together with Apple , have been rumored to be partnering with Intel, however no formal offers have been introduced. We absolutely anticipate offers will probably be introduced as Intel reveals the power of its manufacturing know-how. One other factor to observe is capital expenditures. Citing sturdy buyer demand alerts, Intel now expects capex to be greater than $20 billion in 2026. That is a rise of roughly $3 billion from prior expectations. And for 2027, the corporate expects capex to extend considerably as the corporate invests throughout its U.S. community. Capex has turn out to be a unclean phrase amongst tech traders as a result of the extra hyperscalers spend, the extra their shares fall because of uncertainty in regards to the return on these investments. Constructing a fab could be very costly, however these are sensible investments as a result of the demand is there and prospects will need extra of their chips made within the U.S. to scale back their geopolitical threat. Intel’s foundry is a logical winner for individuals who cannot get sufficient provide from Taiwan Semiconductor. Based mostly on the power within the quarter and optimistic outlook for the longer term, we reiterate our 1 ranking and $140 value goal. Why we personal it Intel is benefiting from the AI increase in a number of methods: Its information middle CPUs are in demand to assist AI agent-driven duties, whereas its foundry enterprise permits the corporate to fabricate its personal processors, together with chips designed by different firms. Opponents : Taiwan Semiconductor , AMD , Arm Holdings Most up-to-date purchase : July 13, 2026 Initiated : June 3, 2026 Commentary The shopper computing and bodily AI group phase delivered sturdy outcomes regardless of softening within the PC market. The corporate mentioned its AI PC revenues improved 26% sequentially and edge deployments (computing near the place the information is created) now make up about 10% of phase income. Greater common promoting costs helped enhance gross sales, not simply from gross sales to higher-end prospects but additionally by passing on a few of their value inflation to the top buyer. The corporate’s information middle and AI phase was the standout performer, with income climbing $2.3 billion yr over yr and working revenue surging $1.8 billion because of sturdy demand from hyperscalers and enterprise prospects. With trade provide unable to maintain up with demand within the agentic AI period, Intel has additionally been in a position to push via CPU value will increase to spice up income. Additionally, as prospects race to lock in provide and hedge towards escalating costs, they’re dashing to Intel to safe long-term provide agreements, just like what we have heard from Micron and Sandisk . How massive can the information middle CPU market develop? Intel was hesitant to place numbers across the forecast of a $220 billion CPU market by 2030 that AMD gave on Thursday at its investor occasion. Nevertheless, administration pointed to the ratio of CPUs to GPUs in AI server racks. As we have defined a number of occasions, CPUs are higher geared up at dealing with agentic duties in comparison with GPUs. The rise of the agentic AI period has pushed the ratio of CPUs to GPUs from 1 to eight through the early levels of the AI period to one thing extra towards 1 to 4. At present, Intel believes the ratio is nearly at parity (1 to 1), and so they anticipate the ratio to skew much more towards CPUs sooner or later. Intel’s foundry enterprise, which primarily makes Intel’s personal chips, continued to indicate enchancment. This unit was once a large number, struggling to fulfill yields and reliability that prospects wanted. However it has discovered its stride beneath Tan’s operational and technological management. Income elevated 31% yr over yr, whereas losses narrowed for the second straight quarter as improved yields and sooner cycle occasions boosted provide above administration’s inside goal. Wanting forward, Intel’s most superior manufacturing course of, known as 14A, is anticipated to enter threat manufacturing on inside merchandise within the second half of 2027, and from there Tan will determine whether or not to enter high-volume manufacturing in 2028. Outlook Turning to steerage, Intel expects income within the vary of $15.8 billion to $16.8 billion. The $16.3 billion midpoint is a wholesome forecast in comparison with the consensus estimate of $15.1 billion. Transferring down the road, the corporate expects GAAP gross margins of 41.0% and Non-GAAP gross margins of 42.0%, representing an enchancment of two proportion factors from final yr. These are each stronger than the consensus Non-GAAP estimate of 40.5%. On the underside line, Non-GAAP earnings per share had been forecasted to be 38 cents, which is an enormous beat versus the consensus analyst estimate of 27 cents. Intel earned 23 cents within the third quarter of 2025. (Jim Cramer’s Charitable Belief is lengthy INTC. See right here for a full listing of the shares.) As a subscriber to the CNBC Investing Membership with Jim Cramer, you’ll obtain a commerce alert earlier than Jim makes a commerce. 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