Key Points:
- Intel stock jumps over 20% after strong Q1 earnings report.
- Q1 revenue and EPS beat analyst expectations, Q2 guidance also positive.
- Data Center and AI business revenue significantly exceeds forecasts.
- Intel sees growing demand for CPUs due to agentic AI development.
Intel (INTC) stock shot up more than 20% in early trading Friday. This surge followed a first-quarter earnings report that beat what analysts expected for both sales and profit. The company also gave better-than-anticipated guidance for the second quarter, driven by strong data center sales.
Intel announced on Thursday that it expects revenue between $13.8 billion and $14.8 billion for the second quarter. This is much higher than Wall Street’s expectation of $13.03 billion. For the first quarter, Intel reported adjusted earnings per share (EPS) of $0.29 on revenue of $13.6 billion. Analysts on Bloomberg had expected EPS of just $0.01 and revenue of $12.36 billion.
In the same quarter last year, the company had reported EPS of $0.13 and revenue of $12.67 billion. “The next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic. This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings,” said Intel CEO Lip-Bu Tan in a statement.
He added, “With a solid foundation in place, we are addressing this opportunity by listening to our customers and driving their success with our technical expertise and differentiated IP. This deliberate reset to how we operate drove a sixth consecutive quarter of revenue above our expectations, as well as new and deepened relationships with strategic partners.”
Intel’s Data Center and AI business generated $5.1 billion in revenue, which far exceeded expectations of $4.41 billion. While Intel initially missed out on the early AI boom due to not having chips designed specifically for running AI models, it is now starting to capture its own part of the AI market.
This is because as AI agents—which are semi or fully autonomous AI bots that can perform tasks for users—become more popular, central processing units (CPUs) like those Intel makes are becoming increasingly important for data center companies and hyperscalers.
The reason is simple: while AI models still largely use GPUs or similar offerings from Amazon or Google, the tasks that AI agents perform, such as browsing websites or searching for data in spreadsheets, rely heavily on CPUs.
And this is making the traditional chip much more popular again. Despite the strong data center revenue, Intel admitted that demand still outstrips supply. However, the company said it would continue to increase supply each quarter. Intel is also dealing with the effects of a broader memory chip shortage, which is hurting PC sales.
According to the International Data Corporation, the global PC market is expected to shrink by 11.3% in 2026. However, revenue is still expected to grow by 1.6% due to higher average selling prices.
