Intel delivered a stronger-than-expected quarterly report, driven by robust growth in its Data Center and AI segment, as the global AI infrastructure buildout begins to lift more than just the GPU-centric players. The company reported a 59% year-over-year revenue increase in Data Center and AI to $6.2 billion, while its Foundry business rose 30%, even though most of that revenue still comes from internal divisions.
Total revenue hit $16.1 billion, up 25% from the prior-year quarter, surpassing the average analyst estimate of $15.1 billion. For the current period, Intel guided revenue between $15.8 billion and $16.8 billion, well ahead of investor expectations and reflecting continued demand across its product lines.
The results underscore a shift in the AI infrastructure boom. For the past two years, Nvidia and a handful of accelerator makers captured the bulk of spending as cloud providers and AI startups hoarded GPUs and other specialized accelerators. But as data center construction accelerates and the entire compute stack becomes strained, component suppliers further down the priority list—like CPU makers and foundry operators—are now seeing significant uplift.
Intel remains the dominant supplier of x86 CPUs for data centers that are not served by hyperscalers using custom Arm designs. Amazon, Apple, and others have moved some workloads to their own chips built by TSMC, but a large portion of the world's data center capacity—especially in neoclouds and enterprise colocation—still relies on Intel processors. As more facilities come online to meet insatiable AI inference and training demand, Intel is positioned to capture that incremental spending.
Gartner's worldwide IT spending forecast puts data center expenditure at $653 billion in 2026, nearly double the $333 billion recorded in 2024. Hyperscalers, neoclouds, and first-party operators are all accelerating their buildouts. Microsoft, Amazon, Google, and Meta alone are expected to account for more than half of that spending. But smaller cloud providers and enterprises are also adding capacity, often turning to Intel-based servers as the most readily available and cost-effective option.
Foundry Progress and the US Manufacturing Push
Intel's foundry business remains in its early stages, but the company is making tangible progress in advanced manufacturing. It became the first chipmaker to deploy ASML's High-NA EUV lithography equipment, using it to produce its upcoming Panther Lake processors. The technology promises better power efficiency and density, and Intel is now offering High-NA EUV services to external customers.
Apple is reportedly in discussions with Intel about moving some of its chip manufacturing to the United States, a move encouraged by the Trump administration as part of a broader effort to bring critical semiconductor production back onshore. For Apple, it would also reduce dependence on TSMC, which operates primarily in Taiwan—a region with geopolitical risk. Similarly, Nvidia invested $5 billion in Intel earlier this year, with the potential to access Intel's foundry for certain chips in the future.
AWS, Microsoft, and the US Department of Defense have already been confirmed as Intel foundry customers. Tesla, Broadcom, and Nvidia are in testing and evaluation phases. If Intel books even a few of these onto major manufacturing contracts, the foundry unit could quickly pivot from an internal service to a significant external supplier, especially for US-based fabrication.
For businesses across the semiconductor ecosystem, Intel's foundry push offers an alternative to the TSMC-led supply chain that currently dominates advanced nodes. More fabs, especially those located in politically stable regions, could ease bottlenecks that have plagued everything from AI chips to automotive microcontrollers.
Broader Implications for the Chip Industry
While Intel still trails TSMC in contract manufacturing and Nvidia in AI hardware design, the latest results illustrate that the AI infrastructure buildout is becoming a rising tide for the broader semiconductor industry. The strain on GPU supply chains has pushed data center operators to optimize their entire server architecture, leading to increased orders for CPUs, networking chips, memory, and interconnect components.
Intel's CPU business, long a cash cow but under pressure from Arm-based competitors, is now benefiting from the sheer volume of new data center deployments. Even if new facilities include some Arm servers, the majority are still x86-powered. Moreover, Intel is integrating AI acceleration features directly into its Xeon processors, allowing enterprises to run inference tasks without dedicated GPUs—a growing market segment.
The company's guidance suggests management expects the trend to continue. Analysts had projected a cautious outlook given lingering concerns about inventory digestion and the cyclical nature of data center capex, but Intel's numbers point to sustained momentum. The key risk remains execution: Intel must avoid production missteps and continue to win external foundry customers while competing with TSMC's advanced N3 and N2 nodes.
From a strategic perspective, Intel is trying to operate three distinct businesses—client computing, data center CPUs, and foundry services—all of which require massive R&D investment. The data center boom provides the revenue needed to fund those ambitions. If the foundry business gains traction, it could transform Intel from a designer-manufacturer into a full-service contract chipmaker, altering the competitive landscape for decades to come.
Related developments: Intel recently announced it had become the first chipmaker to manufacture processors using ASML's High-NA EUV lithography, deploying the advanced technology for its upcoming Panther Lake chips as it pushes to strengthen its foundry business and compete with TSMC. The company is also expanding its Ohio and Arizona fab campuses, aiming to increase US-based production capacity.
Source: TechRepublic News