Shares of Intel (NASDAQ:INTC) remained relatively flat around $82 on Thursday, as the company's ongoing foundry business losses continued to temper the positive momentum generated by robust artificial intelligence demand. The stock edged up 0.5% in premarket trading to $82.29, following a 5.12% decline in Wednesday's regular session.
Despite the recent weakness, Intel shares have surged 121.9% year-to-date in 2026. However, the stock has experienced a six-session losing streak, during which it has dropped 22.4%. The decline has significantly underperformed the broader market, with Intel lagging the S&P 500 by nearly 20 percentage points over that period.
Earnings Beat Clouded by Foundry Losses
Intel reported second-quarter results that exceeded Wall Street expectations on multiple fronts. Revenue came in at $16.13 billion, well above the consensus estimate of $14.42 billion. Adjusted earnings per share of $0.42 doubled analyst forecasts of $0.21, while adjusted gross margin of 41.8% surpassed the 38.8% consensus. The company also provided third-quarter guidance that topped predictions, with a revenue midpoint of $16.30 billion versus $15.10 billion expected and adjusted EPS guidance of $0.38 compared to $0.27 consensus.
However, the positive earnings news was overshadowed by persistent losses in Intel's foundry segment. Intel Foundry reported an operating loss of $2.09 billion on revenue of $5.77 billion, representing a 36.2% negative operating margin. This loss amounted to 43.4% of Intel Products' $4.82 billion operating profit. While the foundry loss narrowed 34% year-over-year, it remains a significant drag on overall profitability.
Segment Performance Highlights AI Strength
The Data Center and AI segment was a standout performer, with revenue surging 59% year-over-year to $6.26 billion and operating income of $2.47 billion, nearly quadrupling from the prior year. The Client Computing and Physical AI segment also delivered solid results, with revenue of $8.88 billion, up 12.8%, and operating income of $2.34 billion. The contrast between the profitable product segments and the loss-making foundry business underscores the challenge Intel faces in balancing its manufacturing ambitions with financial discipline.
Capital Spending and Cash Flow Concerns
Intel increased its projected 2026 capital expenditures to $20 billion, up from $18 billion, with expectations of a further significant rise in 2027. Adjusted free cash flow was negative $8.42 billion, compared to negative $1.05 billion in the same period last year, reflecting heavy investment in foundry capacity. The company ended the quarter with $29.73 billion in cash and short-term investments against $50.54 billion in total debt. CFO David Zinsner noted that while a share sale has not been authorized, it remains a possibility to fund the company's capital-intensive turnaround.
Market Context and Outlook
Semiconductor stocks broadly declined on Wednesday, with Advanced Micro Devices (NASDAQ:AMD) falling 5.60%, Nvidia (NASDAQ:NVDA) dropping 3.36%, and Taiwan Semiconductor (NYSE:TSM) sliding 4.52%. Intel's decline, however, outpaced the overall market, with the S&P 500 falling just 1.52%.
Investor focus is now shifting to Intel's ability to convert its AI-driven revenue growth into sustainable profitability. While the company has demonstrated strong demand for its products, the key challenge remains reducing foundry losses, securing external manufacturing customers, and managing capital spending. Synopsys (NASDAQ:SNPS) recently certified design flows for Intel's 14A process, a positive step, but no new external wafer customers have been announced. CEO Lip-Bu Tan expressed increasing confidence in the competitiveness of the 14A node, but analysts at Futurum Group noted that further revaluation depends on improved foundry economics and more external customer wins.
For now, Intel's stock remains in a holding pattern as investors weigh the promise of AI-driven growth against the financial strains of its foundry transformation.
