Intel delivered its fastest revenue growth in nearly fifteen years last quarter, powered by a 59 percent jump in data center and AI sales to $6.3 billion, but the market’s enthusiasm evaporated after management raised its 2026 capital expenditure budget above $20 billion from an earlier $17 billion to $18 billion range. Shares initially rallied in after-hours trading only to surrender the gains, extending a pullback that has erased roughly a third of the stock’s value from its recent peak even as the shares remain up more than 150 percent year to date.
The numbers are real but the driver is external
The headline figure, overall revenue up 25 percent to $16.1 billion, was flattered by a server CPU cycle that management says will sustain double-digit industry growth through 2028. Client computing revenue rose 13 percent year over year to $8.9 billion, while the foundry business grew 31 percent to $5.8 billion yet still posted a $2.1 billion operating loss. Gross margins expanded 1,290 basis points to 40.4 percent, lifting adjusted earnings per share from a loss of ten cents to a profit of 42 cents. For the current quarter Intel guided revenue of $15.8 billion to $16.8 billion and adjusted EPS of 38 cents, comfortably ahead of the $15.1 billion and 27 cents analysts had modeled.
The capex bill is the story
The company also signaled that 2027 spending will run “significantly above” the new 2026 floor, a trajectory that has become a reliable sell signal across the semiconductor complex this earnings season. Supply constraints are expected to persist through the September quarter before easing toward year end, which means the pricing power that drove the margin beat may have a natural ceiling. Meanwhile the foundry segment continues to burn cash during what is supposed to be the biggest semiconductor boom in a generation, and the “other” businesses line shrank 33 percent after the sale of a majority stake in Altera.
Valuation has detached from the structural reality
Before the rally Intel traded barely above the value of its physical assets; it now commands a forward price-to-earnings multiple of 105. That premium prices in a durability of demand that looks more like a scramble for whatever server CPUs hyperscalers can procure to run agentic AI workloads than a sustainable franchise advantage. The company is a passenger on someone else’s cycle, not the driver, and the market is finally asking whether a foundry that loses money in a boom can ever earn its keep in a bust.