Intel Corporation (INTC) is set to report its second-quarter earnings after the closing bell on Thursday, with investors closely watching for signs that AI server demand is translating into tangible profits. The chipmaker's stock has surged 178.1% year-to-date, closing at $102.62 on Wednesday, though it slipped 2.7% in the latest session.
According to LSEG's preliminary consensus forecasts, Intel is expected to post revenue of $14.42 billion and adjusted earnings of $0.21 per share. The Data Center and AI (DCAI) segment is projected to generate $5.37 billion in revenue, representing a 36.4% increase year-over-year. This segment alone is anticipated to account for approximately 92% of Intel's total revenue growth, underscoring the company's heavy reliance on AI-related demand.
Concentration Risk and Margin Focus
The outsized contribution from DCAI highlights a concentration risk that makes forward guidance crucial. Revenue outside of DCAI is expected to grow by only about 1%, indicating that Intel's broader business remains largely stagnant. The DCAI segment's share of total revenue is forecast to rise to nearly 37%, up from roughly 31% in the prior year.
Investors are looking for evidence of AI server demand in pricing, product mix, and margin results. The adjusted gross margin is expected to come in at 38.8%, compared to a baseline of 37.7% when adjusted for charges that reduced margins by about eight percentage points in the same quarter last year. This implies an underlying improvement of only about 1.1 percentage points, well below the headline nine-point gain.
Market Context and Sentiment
The stock's meteoric rise has raised expectations, but analysts remain cautious. Bernstein analysts noted that while conditions have improved, "fundamentals overall still remain somewhat on the challenging side." The repeatability of last quarter's gains, which were partly driven by limited capacity allowing sales of older and lower-end chips, remains in question.
In April, CEO Lip-Bu Tan highlighted that AI inference demand is "significantly increasing the need" for Intel's CPUs, wafers, and advanced packaging. The upcoming financial results will indicate how much this trend contributed to sustained earnings growth.
Foundry Investments and Guidance
Expenditure on foundries remains a key factor. TD Cowen analysts pointed out that large-scale investment and the rollout of new manufacturing methods continue to pressure margins. A positive customer update may be as significant as a modest beat in sales. Key focus areas for the conference call, scheduled for 2:00 PM PDT, include third-quarter revenue and gross margin guidance, server capacity, and updates on foundry operations.
The broader market context is cautious, with Nasdaq 100 futures down 0.4% early Thursday as traders reassess the returns on significant AI investments. The first full cash-market reaction to Intel's report is expected during trading on Friday.
Risk Factors
Potential risks include a deceleration in the PC market, a less favorable server mix, higher costs from ramping up foundry operations, or renewed selloffs in the chip sector. Conversely, more optimistic forecasts for capacity and margins could help extend the rally.
