Intel (INTC) Q1 FY26 earnings call: guidance and Q&A

Inquire about the structure and benefits of the Google LTA and other unannounced LTAs.

Lip-Bu Tan confirmed the Google deal is a significant multi-year contract for Xeon IPU, demonstrating strong CPU and ASIC demand. Dave Zinsner added that most LTAs are 3-5 years, structured with volume and pricing, providing supply understanding for Intel and price/supply certainty for customers. Some customers prefer confidentiality.

“most of these agreements are structured with volume and pricing, and they are usually somewhere between 3 and 5 years.”

asked by Ben Reitzes · answered by Lip-Bu Tan

Ask if current CapEx includes investments for foundry customers and when more details will be available.

Dave Zinsner explained that 2026 CapEx is flat year-over-year, with space spending down but tool spending up ~25% due to current demand. He reiterated that concrete customer signals for foundry capacity are expected in H2 2026 and early 2027, which will inform future CapEx decisions.

“tool spending will be up year-over-year 25% or so. And so that's, I think, a function of the fact that we just see a lot of demand, and we want to make sure we're catching up on the supply front.”

asked by Ben Reitzes · answered by David Zinsner

Understand if server CPU strength is market-driven or due to Intel's competitive differentiation against x86 and Arm.

Lip-Bu Tan stated that CPU is more efficient for inference and orchestration, with the CPU:GPU ratio moving towards parity. He highlighted Intel's refined roadmap, architectural changes optimized for workloads, and the unique advantage of having CPU, advanced packaging, and foundry to drive rapid changes.

“the ratio of CPU to GPU used to be 1 and 8, and now it's 1:4 and I think towards parity or even better. So I think the demand is very strong.”

asked by Ross Seymore · answered by Lip-Bu Tan

Seek clarification on why Q2 gross margin is declining despite strong DCAI growth and improving 18A yields.

Dave Zinsner explained that while pricing will help, the significant increase in Panther Lake (18A) volume (6-7x Q1) is a headwind because its gross margins are still below the corporate average due to its early ramp stage. Rising input costs (substrates, T glass, memory) are also offsetting improvements in the second half.

“Panther Lake volume increases, it's going to be going up, I don't know, 6 or 7x in the second quarter relative to the first quarter. And while the gross margins are improving in Panther Lake quarter-to-quarter, it's still below the corporate average.”

asked by Stacy Rasgon · answered by David Zinsner

Understand if Terafab is a typical foundry arrangement or a process licensing agreement, given Elon Musk's involvement.

Lip-Bu Tan described the Terafab partnership as exploring innovative ways to improve manufacturing efficiency, driven by a shared conviction that global supply is not keeping pace with demand. He indicated it's a broad relationship and they will update as it progresses, without specifying the exact commercial structure.

“Elon and I, we believe that global supply chain is not keeping pace with the rapid acceleration in the demand. And so we both share the vision that we're going to learn a lot together, exploring the innovative way and then in the process of the manufacturing.”

asked by Timothy Arcuri · answered by Lip-Bu Tan

Request tightening of the "double-digit" server CPU TAM growth estimate and details on ASP expansion, comparing current outlook to 6 months ago.

Dave Zinsner clarified that the double-digit growth refers to units, and the outlook has improved significantly from 6 months ago (when it was expected to be up, not down). ASPs have moved to offset cost increases, but unit volume is the biggest driver. Core count increases also contribute to ASP lift.

“6 months ago, we certainly expected it. Well, I'd say probably at that point, we were thinking it would be up instead of down from a unit perspective. Now obviously, it's going to be up meaningfully.”

asked by Vivek Arya · answered by David Zinsner

Ask for quantification of 18A yield improvement and when it will cease to be a gross margin headwind.

Dave Zinsner stated 18A yields are proprietary but noted Lip-Bu's end-of-year target will likely be hit by mid-year. He expects Panther Lake's (18A) product margins to be "relatively decent" by year-end, but foundry-level gross margins will take "multiple, multiple quarters" to reach corporate average.

“Lip-Bu had a target as we came into the year for the end of this year, and we're probably going to hit that probably the middle of this year.”

asked by Srini Pajjuri · answered by David Zinsner

Seek guidance on how to model long-term CPU demand for agentic AI, including units, cores, gigawatts, or CapEx, and if ARM's $100 billion estimate is reasonable.

Dave Zinsner highlighted the changing CPU:GPU ratio, moving from 1:7/8 for training to 1:3/4 for inference, and potentially 1:1 or better for agentic/multi-agent AI. He also pointed to AI opportunities in client, edge, and physical AI, which benefit from CPUs' power efficiency. Lip-Bu Tan added that it's hard to quantify but a massive opportunity.

“As we look into inference, it's probably getting into like the 3 to 4:1 kind of level. And as you get into agentic and multi-agent, it's one potentially even flip in the other direction a little bit.”

asked by Joshua Buchalter · answered by David Zinsner