#IntelQ2RevenueSurges25% Intel Q2 Revenue Surges 25 Percent

We just closed the books on Q2 2026 and the numbers are in. Intel revenue grew 25 percent year over year. That is the strongest quarterly growth we have seen in 5 years.

I want to walk through what drove it, what it means for the business, for our customers, and for the industry, and what we are doing next.

First, the headline numbers.

Revenue came in at 18.7 billion. That is up 25 percent compared to Q2 2025.

Gross margin was 46.2 percent, up 3 points year over year.

Operating income was 3.1 billion.

Earnings per share was 0.72, beating expectations.

Cash flow from operations was 4.8 billion.

Across the board this was a solid quarter. But the story is not just the percentage. It is what is behind it.

What drove the growth

There are four engines that powered this quarter.

One, Data Center and AI.

This is the biggest driver. Demand for AI training and inference in the cloud and in the enterprise exploded. Our Xeon 6 family with built in AI acceleration saw record shipments. Hyperscalers are building out capacity for 2027 workloads and they chose Intel for a large portion of it. We also saw strong uptake of our Gaudi 3 accelerators for inference. Customers told us they wanted performance per dollar and power efficiency, and that is where we delivered. Data Center revenue was up 38 percent year over year.

Two, Client Computing.

The PC market finally turned the corner. After two years of inventory correction, we are seeing real demand again. The catalyst was the AI PC cycle. Windows updates, enterprise refresh cycles, and new form factors drove people to upgrade. Our Core Ultra 200 series, built on Intel 18A, shipped in volume this quarter. OEMs like Dell, HP, Lenovo, and Asus reported their best back to school and enterprise orders in 3 years. Client revenue was up 18 percent.

Three, Foundry.

Intel Foundry Services had its best quarter ever. We signed 3 new major customers for Intel 18A and Intel 14A. One is a leading fabless AI chip company. One is an automotive chip leader. One is a defense and aerospace contractor. They all cited the same reasons. Leading edge process, US based manufacturing, and supply chain security. Foundry revenue was up 52 percent. More importantly, the pipeline for 2027 and 2028 is the strongest it has ever been.

Four, Network and Edge.

5G rollouts, telco modernization, and edge AI drove growth here. Our new Xeon D processors for edge are winning in retail, manufacturing, and telecom. Network revenue was up 14 percent.

The macro environment helped too. Enterprise IT budgets are back. Companies are investing again after holding back in 2024 and 2025. And there is a clear recognition that AI infrastructure cannot all be built on one architecture. Customers want choice, and Intel provides it.

On manufacturing and technology

A quarter like this does not happen without execution in the fab.

Intel 18A is now in high volume production. Yields are where we need them to be. Power, performance, and area targets were all met. That is why we were able to ramp Core Ultra 200 and why foundry customers signed on.

Intel 14A is on track for risk production in late 2026. We are seeing strong interest because it delivers another 20 percent performance per watt improvement.

Our US manufacturing expansion is ahead of schedule. Fab 52 in Arizona and Fab 34 in Ohio are both producing wafers. The CHIPS Act funding has allowed us to move faster and hire more engineers. We now have over 20,000 people working on US manufacturing.

This matters because customers care about resilience. They do not want all their chips made in one place. They want options. We are giving them options.

On product

Let me highlight a few products that mattered this quarter.

Xeon 6 with P cores and E cores. Customers love the flexibility. They can optimize for throughput or for latency. We saw major wins in database, ERP, and AI inference.

Core Ultra 200 AI PCs. Over 200 designs shipped. Battery life is up 30 percent. AI performance is up 4x versus last generation. Enterprises are buying because of Copilot and local AI workloads.

Gaudi 3. We positioned it as the most efficient inference accelerator. Price performance is 40 percent better than alternatives. That won us deals with 2 of the top 5 cloud providers.

Arc GPUs. The gaming market is steady, but the real story is in workstations and pro visualization. Arc Pro is now certified on the major CAD and creative apps.

On customers and partnerships

This quarter we deepened partnerships with companies that matter.

We signed a multi year agreement with a major cloud provider to co develop AI servers based on Xeon 6 and Gaudi 3.

We expanded with Dell and HP on AI PC enterprise programs.

We partnered with an automotive Tier 1 to put Intel 18A chips in next gen ADAS platforms.

We worked with the US government on secure chips for critical infrastructure.

Customers told us three things. They want performance. They want supply chain security. They want a long term partner. That is the Intel we are building.

On the financials in more detail

Revenue 18.7 billion, up 25 percent.

Data Center and AI 7.2 billion, up 38 percent.

Client Computing 8.1 billion, up 18 percent.

Network and Edge 2.0 billion, up 14 percent.

Foundry 1.4 billion, up 52 percent.

Gross margin 46.2 percent. That is up because of better mix, higher utilization, and cost discipline.

Operating expenses were flat year over year. We are investing in R and D and in manufacturing, but we are also being disciplined.

Free cash flow was 2.9 billion. We used that to pay down debt and to reinvest in fabs.

We ended the quarter with 28 billion in cash. Our balance sheet is strong.

What this means for the industry

The 25 percent growth is not just an Intel story. It is a signal about where tech is going.

AI is no longer experimental. It is in production at scale. And it needs CPUs, GPUs, accelerators, and memory. Not just one of those.

The PC is not dead. AI PCs are the first real reason to upgrade in 5 years.

Manufacturing matters again. Geopolitics and supply chain taught everyone that you need regional capacity.

Competition is good. A healthy Intel makes the whole ecosystem better. Software gets optimized. Prices come down. Innovation speeds up.

We are not claiming victory. We are in the middle of a multi year turnaround. But this quarter shows the strategy is working.

Challenges we are watching

No quarter is perfect. Here is what we are focused on.

Execution. We have to keep ramping 18A and deliver 14A on time.

Competition. The AI market moves fast. We have to keep winning on performance per dollar.

Costs. Fabs are expensive. We have to manage capital efficiently.

Geopolitics. We operate in a complex world. Supply chain security is a feature, not a bug.

We have teams on all of these.

Guidance and outlook

For Q3 2026 we expect revenue between 19.2 billion and 20.2 billion. That implies continued growth.

We expect gross margin to expand another point as 18A ramps further.

For the full year we now expect revenue growth in the low 20 percent range.

We are also raising our capital expenditure forecast slightly because demand is stronger than we expected 6 months ago. We would rather build capacity now than be short later.

On people and culture

None of this happens without the team.

To the engineers in Oregon, Arizona, Ohio, Israel, and Ireland who taped out 18A. Thank you.

To the sales teams who spent months with customers. Thank you.

To the factory teams working 24 7 to ramp new lines. Thank you.

We hired 4,000 people this quarter, mostly in manufacturing and engineering. We are building for the long term.

A note on AI and responsibility

With growth comes responsibility. We are building AI into everything, but we are also focused on how it is used.

We are working with customers on AI safety, on bias testing, and on energy efficiency. Data centers are using a lot of power. Our job is to deliver more performance per watt every generation. That is good for customers and good for the planet.

Final thoughts

25 percent growth in Q2 is a milestone. It shows that the investments we made in process technology, in product, and in manufacturing are paying off.

But we are not done. The goal is not one good quarter. The goal is to be the company that powers the next 10 years of computing. From AI in the cloud, to AI on your laptop, to AI at the edge, to the chips that run cars and factories and hospitals.

That takes execution quarter after quarter.

To our customers, thank you for the trust.

To our partners, thank you for building with us.

To our employees, thank you for the work.

To our shareholders, thank you for the patience.

We are just getting started.

If you have questions about the quarter, about products, or about our roadmap, reach out. We will be hosting a call later today to go deeper.

Let us keep building.