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While the market has been talking about Alphabet and Tesla falling this week on AI capex fears, Intel quietly reported last night and is telling the exact opposite story, and given the stock is already up 324% over the past year, this deserves attention.
As per the reports, revenue hit $16.13 billion, up 25% yoy, beating the $14.4-14.45 billion Wall Street expectation. Non-GAAP EPS came in at $0.38-0.42 depending on the source, roughly double the \~$0.21 estimate. CEO called it Intel's strongest revenue growth in more than 15 years. The Data Center and AI segment grew 59% yoy, custom chip revenue nearly tripled and Q3 guidance came in above expectations, a $16.3 billion revenue against a $15.1 billion Wall Street estimate with adjusted EPS guided to $0.38 against a $0.27 estimate. Stock jumped as much as 12-13% initially and was still up nearly 4-7% by this morning.
Intel raised its 2026 capex guidance too, from $18 billion to $20 billion with 2027 spending expected to rise meaningfully. That's the same type of announcement that got Alphabet to decline 6-7% two days ago. Intel got rewarded for it instead. The difference is the context, Intel's capex hike came along with a highly successful quarter (much better than estimates), while Alphabet's came on top of an already strong quarter that got judged by the spending number alone.
Also worth noting is that, Intel Foundry's external revenue was only $293 million this quarter, about 5% of segment revenue, most of what's reported there is Intel manufacturing chips for its own product divisions not third parties. The foundry division's loss did reduce to $2.09 billion but it's still losing $2 billion in a single quarter. And under strict accounting rules, Intel actually posted a large $11 billion net loss, even though the adjusted numbers looked great, the difference came down to one time charges, specifically an $11 billion GAAP loss driven by a $12.5 billion non-cash accounting charge tied to shares the U.S. government holds in Intel under its CHIPS Act stake, revalued every quarter against Intel's own rising stock price, meaning the better the stock does, the bigger this particular charge gets. So this is a turnaround that's genuinely working. The chip and AI infrastructure business is clearly progressing right now. But the foundry bet, the one that's maybe supposed to make Intel the next TSMC, is still mostly Intel manufacturing chips for itself, plus real ongoing losses.
This stock is up 324% over the past year, largely on the combination of a management shakeup under the CEO, direct government investment from the current administration, and a strategic Nvidia investment, along with tailwind of AI agents creating fresh demand for CPUs rather than just GPUs.
The U.S. government owns almost 10% of Intel specifically because Washington decided domestic chip manufacturing was too important to leave. That same stake is now the source of Intel's $11 billion net loss that's really just proof the stock has gone up a lot. Meanwhile the actual foundry business the government bet on is still 95% internal volume and $2 billion in loss every quarter. So the real test isn't this earnings report, it's whether Google's TPU order and the Nvidia's unconfirmed rumours (of considering Intel as a possible manufacturing option) turn into real external revenue.