Intel Signals AI Turnaround as Q1 Results and Guidance Smash Estimates

Intel reported first-quarter earnings that significantly exceeded Wall Street expectations, marking a potential inflection point for the struggling semiconductor giant. The company's stock, which has already seen substantial gains this year, jumped 16% in after-hours trading following the announcement. While Intel has lagged behind rivals Nvidia and AMD during the initial AI surge, the company is finding new traction. Revenue grew 7.2% year-over-year to $12.67 billion, ending a streak of declines in five of the previous seven quarters. This recovery is being bolstered by the U.S. government, which has become the company's largest shareholder to promote domestic chip manufacturing. The data center division led the growth, with revenue climbing 22% to $5.1 billion, driven by surging demand for central processing units (CPUs) as agentic AI workloads expand. Looking ahead, Intel projected second-quarter revenue between $13.8 billion and $14.8 billion and adjusted earnings per share of 20 cents, both well above analyst forecasts of $13.07 billion and 9 cents, respectively. Intel's foundry business also showed progress, with revenue increasing 16% to $5.4 billion. The company is betting heavily on its 18A process node and the upcoming 14A technology. A strategic partnership with Elon Musk's Terafab complex in Texas is expected to produce high-performance chips for Tesla, xAI, and SpaceX using the 14A process. Despite these growth signals, Intel continues to face financial headwinds. The company reported a widened net loss of $4.28 billion, or 73 cents per share, compared to a loss of $887 million in the prior year. The company's long-term success now depends on convincing TSMC customers to migrate to Intel's fabrication services.