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    INTC
    Earnings call· Mar 2026(Q1 FY26)

    INTEL Q1 FY26 earnings call INTC

    Apr 23, 2026 Source

    Executive summary

    Intel Q1 FY26 — Strong Demand and Improved Supply Drive Beat

    Intel delivered strong Q1 FY26 results, exceeding revenue and EPS guidance, driven by robust demand for Xeon CPUs and improved factory output. The company is navigating a dynamic macroeconomic environment with a focus on scaling supply, particularly for AI-driven workloads, and improving operational efficiency. While facing headwinds from early-stage node ramps and rising input costs, Intel remains confident in its strategic direction and long-term growth opportunities in the semiconductor industry.

    Highlights

    5

    • Q1 revenue of $13.6 billion was $1.4 billion above the midpoint of guidance, marking the sixth consecutive quarter of exceeding financial expectations.

    • Non-GAAP gross margin reached 41%, approximately 650 basis points ahead of guidance, driven by higher volume, mix, pricing, and better 18A yields.

    • Non-GAAP EPS was $0.29, significantly above guidance of breakeven, due to higher revenue, stronger gross margins, and spending discipline.

    • DCAI revenue increased 22% year-over-year to $5.1 billion, reinforcing strong growth expectations for the year, with ASIC growth up >30% sequentially and nearly doubling year-over-year.

    • Intel Foundry revenue grew 20% sequentially to $5.4 billion, with Intel 3 and 18A yields running ahead of internal projections.

    Concerns

    5

    • Intel Foundry reported an operating loss of $2.4 billion in Q1, though improved $72 million sequentially, due to early ramp costs of Intel 18A and increased 14A investments.

    • Q2 gross margin guidance of 39% declines modestly from Q1 due to a larger contribution from early-ramp Intel 18A and non-repeating Q1 inventory benefits.

    • Full-year PC unit TAM is expected to be down low double-digit percent, in line with industry peers, with PC demand weakening in H2.

    • Operating expenses for 2026 are likely to be higher than the targeted $16 billion due to inflationary pressures, variable compensation, and targeted investments.

    • Capital expenditures for 2026 are now expected to be flat to last year, versus a prior expectation of flat to down, reflecting increased capacity investments.

    Guidance & targets

    16
    CategoryTargetConfidence
    Q2 revenue
    $13.8 billion to $14.8 billion
    high materiality
    High
    Q2 revenue sequential growth
    2% to 9%
    medium materiality
    High
    Q2 revenue midpoint
    $14.3 billion
    high materiality
    High
    Q2 non-GAAP gross margin
    39%
    high materiality
    High
    Q2 non-GAAP tax rate
    11%
    medium materiality
    High
    Q2 non-GAAP EPS
    $0.20
    high materiality
    High
    Full-year PC unit TAM
    down low double-digit percent
    high materiality
    Medium
    Full-year server CPU unit growth
    double-digit
    high materiality
    High
    Full-year 2026 OpEx
    likely higher than $16 billion
    high materiality
    Medium
    Full-year 2026 CapEx
    flat to last year
    high materiality
    High
    Full-year adjusted free cash flow
    positive
    high materiality
    High
    Noncontrolling interest (NCI)
    ~$250 million
    medium materiality
    High
    Noncontrolling interest (NCI)
    ~$1.1 billion
    medium materiality
    High
    Debt maturities retirement
    $2.5 billion
    medium materiality
    High
    Debt maturities retirement
    $3.8 billion
    medium materiality
    High
    Intel 14A design commitments
    emerge beginning in the second half of 2026 and expanding into the first half of 2027
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    CCG (Client Computing Group)
    Revenue was better than expectations, with demand outstripping supply. Operating profit was up approximately $300 million quarter-over-quarter on improved mix and product margins, sales of previously reserved inventory, better 18A yields, and lower operating expenses. Launched Core Ultra Series 3 and Intel Core Series 3 processor.
    Operating Profit Margin: 33%AI PC revenue growth: 8% sequentiallyAI PC revenue share of client CPU mix: >60%
    		$7.7 billion—-6%$2.5 billion
    DCAI (Data Center and AI)
    Revenue was well above expectations, reinforcing the strong year of growth. Strength continued across all segments and customers as investments in CPUs are accelerating to support the evolution of AI. Operating profit was up approximately $292 million quarter-over-quarter on improved product margins, better cycle times and yields (Intel 3), and lower operating expenses. Signed multiple long-term agreements, including Google. Xeon 6 was selected as the host CPU for NVIDIA's DGX Rubin NVL8 systems.
    Operating Profit Margin: 31%ASIC growth: >30% sequentiallyASIC growth: nearly doubling year-over-year
    		$5.1 billion+22%+7%$1.5 billion
    Intel Foundry
    Revenue increased on increased EUV wafer mix driven by Intel 3 and significant growth in 18A. Operating loss improved $72 million quarter-over-quarter as better yields across Intel 4, 3, and 18A drove higher gross margins, mostly offset by increased operating expenses associated with intentional step-up in Intel 14A investments. Delivered output above expectations, drove steady improvements in yields, and met key 14A milestones. Added to its backlog of advanced packaging services.
    External foundry revenue: $174 million
    		$5.4 billion—+20%-$2.4 billion
    All Other
    Strong quarter for Mobileye.
    		$628 million—+9%$102 million

    Operational metrics

    14
    Non-GAAP Gross Margin
    41%650 bps ahead of guidance
    Q1 FY26

    Due to higher volume (including previously reserved inventory), mix, pricing, and better 18A yields.

    Non-GAAP EPS
    $0.29vs. breakeven guidance
    Q1 FY26

    Included a roughly $0.06 one-time gain in interest and other.

    AI-driven businesses revenue share
    60%Grew 40% YoY
    Q1 FY26

    Represents the share of total revenue from AI-driven businesses.

    AI PC revenue growth
    8%Sequential
    Q1 FY26
    AI PC revenue share of client CPU mix
    >60%
    Q1 FY26
    ASIC business revenue growth
    >30%Sequential
    Q1 FY26
    ASIC business revenue growth
    nearly doublingYoY
    Q1 FY26
    ASIC business run rate
    >$1 billion
    Annualized

    The business is already at a run rate north of $1 billion.

    Fab 34 Joint Investment Buyout
    $7.7 billion cash, $6.5 billion new debt
    Q1 FY26

    Repurchase of 49% equity interest in the joint investment in Fab 34 in Ireland.

    Tool spending growth
    ~25%YoY
    FY26

    Part of the flat CapEx, offsetting reduced space spending, driven by demand.

    CPU:GPU ratio (training)
    1:7 to 1:8
    Current

    Typical ratio for training solutions.

    CPU:GPU ratio (inference)
    1:3 to 1:4
    Current

    Typical ratio for inference solutions.

    CPU:GPU ratio (agentic/multi-agent)
    1:1 or better
    Future

    Expected ratio for agentic and multi-agent AI workloads, potentially flipping in the other direction.

    Panther Lake (18A) volume increase
    6-7xvs Q1 FY26
    Q2 FY26

    Significant increase in volume, contributing to Q2 gross margin headwind due to early ramp and margins below corporate average.

    Industry KPIs

    8
    MetricValueDetails
    Backlog order bookadditional growth
    Ai data center revenue$5.1 billionUSD
    Fab capacity utilizationsteady improvements in yields
    Advanced packaging revenueadditional growth in customer backlog
    Design wins socket pipeline—
    Inventory channel inventorypreviously reserved inventory
    Node platform ramp schedulefull volume production ramp
    Strategic supply agreements customer prepaymentsmultiple long-term agreements

    Orderbook & backlog

    2
    Advanced packaging services backlogadditional growthQ1 FY26

    additional growth

    committed demand that will begin to convert to revenue in 2027

    Advanced packaging demandbillions of dollars per yearCurrent

    expected to be a big part of foundry revenue through this decade

    Product announcements

    5
    ProductTypeDetails
    Core Ultra Series 3launch
    Intel Core Series 3 processorlaunch
    Xeon 6milestone
    Granite Rapidsroadmap
    Coral Rapidroadmap

    Deals & partnerships

    4
    GoogleCustomer contract3-5 years

    One of multiple long-term agreements signed in Q1, supporting sustainable business momentum for DCAI.

    NVIDIAProduct integration

    Xeon remains the most deployed host CPU due to its industry-leading memory, security and networking orchestration.

    SambaNova SystemsCollaborationmultiyear

    Combines SambaNova's RDUs and Intel Xeon 6 processors, an example of partnership on heterogeneous compute architectures.

    SpaceX, xAI, and TeslaPartnership (Terafab initiative)

    Driven by a shared conviction that global semiconductor supply is not keeping pace with the rapid acceleration in demand.

    Capital programs

    1
    Fab 34 in Ireland Joint Investment Buyoutclosed
    Period spend: $7.7 billion cash, $6.5 billion new debt
    Funding: Cash and new debt

    Benefit: Allows shareholders to participate in the full economic benefits from a fab just now hitting its stride.

    Repurchase of 49% equity interest in the joint investment.

    Risks & headwinds

    6
    Macroeconomic and geopolitical environmentsOngoing

    Dynamic environment shaping customer behavior and investment decisions.

    Mitigation: Prudent planning.

    Constraints and rising prices for key componentsCould impact demand at some point in the year (H2 FY26)

    Driving higher costs for memory, wafers, and substrates.

    PC demand weakeningSecond half of the year (H2 FY26)

    Full-year PC unit TAM expected to be down low double-digit percent.

    Mitigation: Inventory replenishment at customer level and pricing actions are expected to mitigate impact on Intel's billings.

    Higher operating expensesFY26

    Likely higher than the $16 billion directional target.

    Mitigation: Due to inflationary pressures, variable compensation, and targeted investments. Focus on efficiency and maximizing ROI.

    Intel 18A early ramp and mix shiftQ2 FY26

    Q2 gross margin declines modestly from Q1.

    Mitigation: Due to a meaningfully larger contribution from Intel 18A, which is still early in its ramp and has margins below corporate average.

    Rising input costsSecond half of the year (H2 FY26)

    Growing headwinds, especially in memory, substrates, and T glass.

    Mitigation: Company will continue to push for gross margin expansion to overcome these costs.

    Q&A highlights

    8

    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

    2 min read5 chapters

    Detailed Narrative

    01

    AI-Driven CPU Resurgence

    Intel highlights a significant shift in AI infrastructure, with CPUs reasserting their role as the indispensable foundation. The ratio of CPU to GPU in deployments is moving back towards CPU, especially for inference and agentic AI workloads, driving strong and sustained momentum for Xeon server demand. This trend is seen as a structural reason for the CPU franchise to be a meaningful growth engine for years, not just quarters.

    02

    Foundry Progress and Advanced Packaging

    Intel Foundry is making steady progress, with Intel 4, Intel 3, and 18A yields running ahead of internal projections, indicating a meaningful inflection in execution and factory output. The company is also advancing its advanced packaging technologies, seeing additional growth in customer backlog, and expects earlier design commitments for Intel 14A starting in late 2026 and expanding into H1 2027.

    03

    Strategic Partnerships and Capacity Expansion

    Intel announced a partnership with SpaceX, xAI, and Tesla to support Terafab, exploring innovative ways to improve manufacturing efficiency. The company is also increasing capacity investments, with 2026 CapEx now expected to be flat year-over-year (vs. flat to down previously), driven by a 25% increase in tool spending to meet robust demand. This reflects a strategic shift from space spending to tool spending.

    04

    Operational Efficiency and Financial Discipline

    The company emphasizes a cultural transformation towards being data-driven and engineering-centric, focusing on operational improvements and maximizing ROI. Despite inflationary pressures and increased investments, Intel aims for continued gross margin expansion and expects to retire $2.5 billion in debt maturities in 2026 and $3.8 billion in 2027, while maintaining a positive adjusted free cash flow for the full year, excluding the Fab 34 buyout.

    05

    Client and Data Center Momentum

    CCG revenue was better than expected, with AI PC revenue growing 8% sequentially and now representing over 60% of client CPU mix. DCAI revenue increased 22% YoY, driven by accelerating investments in CPUs for AI evolution, and signed multiple long-term agreements, including with Google, reinforcing sustainable business momentum. Xeon 6 was also selected as the host CPU for NVIDIA's DGX Rubin NVL8 systems.

    AI-generated summary of the company’s earnings call. Not investment advice.