Q2 Earnings: Intel sees AI Progress but PC Division Lags

The chipmaker’s Q2 2025 revenue came in at $13.2 billion, up 3 percent year‑on‑year and just ahead of Wall Street’s $13.1 billion whisper, yet net income slid 7 percent to $1.35 billion ($0.31 a share) as Intel ploughed record cap‑ex into its foundry push and AI accelerator road‑map. Data Center and AI revenue grew a solid 18 percent to $5.4 billion, buoyed by early Momentum for Gaudi 3 boards, which CEO Pat Gelsinger says are now “booked out through mid‑2026” at hyperscalers and a handful of LLM start‑ups. By contrast, the Client Computing Group—the heart of Intel’s laptop and desktop business—fell another 11 percent to $5.9 billion, reflecting an anaemic PC refresh cycle that even Windows 12 anticipation hasn’t yet reversed.

The AI‑rich server chips pushed gross margin up 140 basis points sequentially to 43.6 percent, but heavy spending on Ohio and Arizona fabs plus the $15 billion Tower deal close lopped operating margin to 17.3 percent. Intel now expects full‑year cap‑ex of “about $30 billion,” up from $27 billion three months ago, as it races TSMC and Samsung for advanced‑node capacity and U.S. CHIPS Act subsidies.

Investors had braced for the spend as shares slipped less than two percent after hours, helped by Gelsinger’s pledge that Intel Foundry will break even by late 2027 and by an eyebrow‑raising forecast that Gaudi accelerator revenue will “quadruple” in 2026, giving Intel a “mid‑teens” slice of the AI‑compute market. Skeptics note that Nvidia’s H200 successor is set for volume in the same window, and AMD’s MI350 has landed design wins at three cloud firms. Still, Intel’s Q2 bookings show at least $1 billion in Gaudi backlog, and Microsoft’s Azure CTO Kevin Scott appeared on the call to confirm Gaudi clusters are now live in two U.S. regions.

Meanwhile, Mobileye contributed $586 million in sales, up 12 percent on robust EyeQ shipments, and PSG (the FPGA unit) added $576 million, up 9 percent. But Altera spin‑off costs trimmed EPS by two cents, and Intel booked a $120 million restructuring charge tied to the NUC and networking exits begun last year.

Looking ahead, Intel guided Q3 revenue to $13.9 billion–$14.9 billion and non‑GAAP EPS of $0.39 ± $0.05, banking on Alder Lake Refresh laptops for the back‑to‑school window and incremental Gaudi shipments. Whether that is enough to placate a market hooked on Nvidia‑style blowouts is anyone’s guess, but tonight’s numbers at least show that Intel’s AI story has moved from PowerPoint to the purchase order.

Key take‑away for investors: Intel is still straddling two worlds—shrinking PCs and capital‑intensive foundry bets—but its data‑centre AI ramp is finally visible in the P&L. If Gaudi 3 keeps shipping and fabs stay on schedule, 2025 might be remembered as the year Intel started climbing out of its post‑Moore’s‑Law valley.