Intel Corp. posted its fastest revenue growth in more than a decade and a half last quarter, a turn that has less to do with a PC recovery than with a data-center business that has suddenly become the company’s most important engine. Revenue reached $16.1 billion in the three months ended June 27, up 25% from a year earlier, and the data-center and AI product line alone surged 59% to $6.3 billion. For a company that spent years explaining why its foundry model would eventually pay off, the quarter felt like the moment the thesis stopped being theoretical.
The AI engine arrives
The growth was broad, double-digit gains showed up in the foundry division and the newly renamed client computing and physical AI group, but the numbers make clear where the leverage lives. Data-center and AI revenue now represents nearly 40% of the total, up from roughly 31% a year ago. Chief Executive Lip-Bu Tan, who joined in March 2025, said demand continued to outstrip Intel’s expanding supply, a phrasing that in this industry usually means pricing power. The company raised its 2026 capital spending to more than $20 billion from a previous $17 billion to $18 billion range, with the vast majority directed at its U.S. network through 2027. Clean-room space, equipment orders, substrates and memory are the bottlenecks; Intel is spending to widen them.
Supply is the story
The constraint is not unique to Intel. The industry faces a shortage of silicon wafers, memory chips and advanced packaging substrates that has pushed prices up and forced every major player to choose between allocation and expansion. Intel’s distinction is that it sits on both sides of the transaction, it designs the chips and runs the fabs that make them. Tan highlighted improved yields on the Intel 7, 3 and 18A process nodes, with 18A yields increasing “meaningfully” during the quarter. Panther Lake and Wildcat Lake are ramping for mobile and budget laptops, and trial runs of 18A-P, an enhanced version of 18A, have begun. The next node, Intel 14A, is on track for internal trial runs in the second half of 2027 and high-volume production in 2028. Whether customers commit to that roadmap at scale is the question that will determine if the foundry business becomes a profit center or a very expensive strategic option.
The roadmap and the guidance
For the third quarter, Intel guided revenue between $15.8 billion and $16.8 billion, with supply still tight and growth skewed toward the end of the period and into the fourth quarter. PC products will be “subseasonal” in the second half, Chief Financial Officer David Zinsner said, while server processor demand is expected to keep improving through 2028. The leadership shuffle, Alex Katouzian taking the client group, Pushkar Ranade named chief technology officer, Seok-Hee Lee running advanced packaging, Aparna Bawa overseeing legal, ethics, compliance, people and culture, suggests Tan is building a bench for a multi-year execution sprint. The quarter proves the demand signal is real. The next several quarters will show whether Intel’s manufacturing machine can turn that signal into sustained margin expansion, or whether the industry’s capacity crunch simply lifts all boats while Intel’s structural costs stay high.