Intel earnings show just how dramatically the company has come back from being 'near-dead'

By Hannah Pedone

The company is impressing analysts with its profit performance

Shares of Intel are down 3% in morning action on Friday.

Intel just posted its strongest revenue growth in 15 years - and perhaps that wasn't even the biggest highlight from its report, according to one analyst.

Seaport Research's Jay Goldberg wrote that the "standout feature," in his view, was Intel's profitability. Pro-forma gross margins topped 40% for the first time since the start of 2024, he said. And Intel's (INTC) pro-forma operating margin of 17% was its highest since early 2022, demonstrating to Goldberg that the company's "high fixed-cost model" has "considerable operating leverage."

That model "has been working against the company for years" but now "should demonstrate what the company can do as it returns from near-dead," he wrote in his late Thursday report.

In other words, Intel's business requires that the company spends heavily up front on things like manufacturing and design but now gets to leverage the benefits of those investments as it sees a surge in demand for central processing units.

The latest results highlight a pronounced turnaround for Intel, which just two years ago had to suspend its dividend and conduct massive layoffs as it looked to conserve cash.

Rosenblatt analyst Kevin Cassidy wrote in a Friday note that demand for compute is "pushing Intel's capacity limits." Yet in the face of that constraint - and despite the fact that the company is shifting capacity from personal-computer CPUs to server CPUs - client revenue still substantially increased from the prior-year quarter.

Intel's PC business, which is represented in its client segment, showed "surprising upside," Bernstein analyst Stacy Rasgon said in a Friday note. Sales from Intel's client computing and physical artificial-intelligence group came in at $8.9 billion for the second quarter, about $900 million above the consensus view.

That said, Rasgon believes that "uncertainty" around commentary over the company's capital expenditures may give investors "some pause."

He noted that the company raised its spending outlook "materially" this year, to over $20 billion, and plans for it to be "up significantly" in 2027. That is "leaving considerable room for interpretation and nervousness," Rasgon said.

Intel had previously been guiding for $18 billion in capital expenditures this year.

Shares of the company are off about 3% in morning action on Friday.

See also: Why Micron and other chip stocks are bouncing back so strongly

-Hannah Pedone

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07-24-26 1010ET