Intel stock earnings could expose the fault line beneath its AI comeback

Intel stock NASDAQ:INTC heads into Thursday’s earnings with expectations running ahead of a turnaround story.

Shares remain up more than 160% this year despite falling over 30% from June’s high, as investors bet that AI-server demand can revive the company’s processor business and support its manufacturing ambitions.

Wall Street expects second-quarter revenue of about $14.44 billion and adjusted earnings of 22 cents a share, slightly above Intel’s guidance for $13.8 billion to $14.8 billion and 20 cents.

Intel reports after Thursday’s close, followed by a 5 pm ET call. Options traders are pricing a 13.52% move in either direction.

Server momentum raises the bar

The strongest part of Intel’s comeback is its Data Center and AI division.

First-quarter revenue rose 22% to $5.1 billion, driven largely by a 27% increase in server processor prices, even as unit volumes fell 5% and supply constraints prevented Intel from meeting all demand.

That mix explains why analysts broadly expect a beat.

Wedbush analyst Matt Bryson said the question was “not whether Intel beats expectations, but rather how does sentiment shift,” according to TipRanks.

He estimates data-centre sales could rise about 10% sequentially and 40% year on year, with double-digit server price increases accounting for much of the growth.

The difficulty is that strong pricing is already embedded in expectations.

Investors will want evidence that volumes are also improving and that constrained production is easing. Intel’s 39% adjusted gross-margin forecast, below the 41% reported in the first quarter, makes the quality of any beat especially important.

Foundry economics remain the fault line

Intel Foundry reported $5.42 billion of first-quarter segment revenue, but only $174 million came from external customers.

The unit recorded a $2.44 billion operating loss, showing that most reported sales still reflect manufacturing work for Intel’s own product divisions rather than a mature third-party business.

KeyBanc analyst John Vinh has taken the bullish view.

He raised his price target to $155 from $110 and kept a Buy rating, after estimating that Intel 18A yields had improved to about 85% from 65% in the previous quarter.

His supply-chain checks also indicated that 14A remains on course for mass production in the second half of 2028.

Intel’s new collaboration with Fortinet offers another proof point. The companies will jointly develop Fortinet’s SP6 security processor using Intel’s design, packaging and manufacturing capabilities.

However, neither financial terms nor a production timetable were disclosed, so the agreement does not yet establish that foundry returns are improving.

Guidance will decide whether the rally holds

Third-quarter guidance must show that stronger processor demand can lift margins while Intel continues funding factories and advanced process development.

UBS raised its target to $121 from $83 while retaining a Neutral stance, citing data-centre demand and possible pricing gains.

The firm said investors would also require updates on manufacturing execution and external foundry customers.

Intel’s planned job reductions within its data-centre group could support expenses, but they underline how aggressively management is still reshaping the business.

The bullish outcome combines faster data-centre growth, margins above guidance, improving 18A economics and firmer external commitments.

The bearish outcome is a server-led beat accompanied by weak margins, supply constraints or continued ambiguity around foundry profitability.