Intel grows at fastest pace in 15 years. Yet the stock weakened by 35%
Intel in the second quarter of 2026 increased revenue by 25%, its fastest pace since 2011. Results beat estimates across all key metrics, margins rose by 12 percentage points, and management raised the outlook for the next quarter. The stock reacted with a drop of almost 8% and is 35% below its June all-time high. The disconnect between the earnings report and the price action is not irrational. Behind it lies a part of the company's own business that remains highly loss-making.
Key points
Revenue for the second quarter reached $16.13 billion, up 25% year-on-year. This marks the fastest pace since 2011 and a beat of the consensus by approximately $1.7 billion.
Adjusted earnings per share of $0.42 virtually doubled analyst expectations. Adjusted gross margin climbed to 41.8% from 29.7% a year ago.
External foundry revenue amounted to only $293 million, or about 5% of total revenue. The segment's operating loss remained above $2 billion per quarter.
The stock closed on Friday, July 24, at $92.32, below its pre-announcement level. From its all-time high of $142.35 at the end of June, it is down 35%, but it is still up about 150% year-to-date.
Capex for 2026 was raised from $18 billion to over $20 billion, and management signaled another significant increase for 2027. Adjusted free cash flow was negative $8.4 billion for the quarter.
The fastest revenue growth since 2011
A year and a half ago, Intel was a textbook example of a company written off by the market. It was posting billions in losses, laying off workers, losing share in the server market, and its manufacturing division was burning cash at a pace that raised questions about the very existence of the entire foundry project. The U.S. government eventually stepped in as a key investor. And that changed everything.
Revenue was stagnant in 2025 and grew by only 7% in the first quarter of 2026. A jump to 25% in a single quarter is therefore not a routine acceleration but a fundamental shift in trajectory. Management also noted it was the seventh straight quarter in which the company beat its own outlook. For a company whose main problem for years was unreliable forecasting, this is an important signal about the quality of management.
What Intel actually reported
Key figures for the second quarter of fiscal year 2026, published after the market close on Thursday, July 23, show beats across every important line item.
Metric | Consensus | Actual | Difference |
Revenue Q2 2026 | $14.42 bn | $16.13 bn | +$1.7 bn |
Adjusted EPS | $0.21 | $0.42 | double |
Adjusted gross margin | 39.0% | 41.8% | +2.8 pp |
Adjusted operating margin | 10.7% | 17.2% | +6.5 pp |
Operating cash flow | $5.23 bn | $7.00 bn | +$1.77 bn |
Revenue guidance Q3 (midpoint) | $15.1 bn | $16.3 bn | +$1.2 bn |
EPS guidance Q3 | $0.27 | $0.38 | +41% |
Source: Intel
Margins deserve special attention. Adjusted gross margin vaulted to 41.8% from 29.7% a year ago, an increase of 12.1 percentage points. Adjusted operating margin flipped from minus 3.9% to plus 17.2%. For a manufacturing company with a massive fixed cost base, this is the impact of operating leverage, where each additional dollar of revenue translates into profit much more efficiently than for asset-light firms. It also means the same leverage works in reverse if demand weakens.
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