Intel Corporation (INTC), Financial Analysis

Key conclusions

1. Revenue is growing again. Q2 2026 revenue (to 27 Jun 2026) was $16.13bn, up 25%. Data Center and AI revenue was $6.26bn, up 59%. Q3 2026 guidance is $15.8bn to 16.8bn, up 19% at the midpoint, with a non GAAP gross margin of about 42%. FY2025 revenue was $52.85bn, against $79.02bn in FY2021.
2. Intel Products is profitable and Intel Foundry makes a loss. In Q2 2026 Intel Products earned $4.82bn of segment operating income and Intel Foundry lost $2.09bn. Foundry revenue of $5.77bn was almost all internal; external foundry revenue was $293m. TTM core operating margin was 8.4%.
3. GAAP results carry large one off items. Q2 2026 net loss was $11.03bn after a $12.53bn loss on shares held in escrow for the US government. The loss grows when the share price rises. Q1 2026 carried a $3.9bn goodwill charge, mostly Mobileye. Non GAAP EPS was $0.42 in Q2 2026.
4. Intel raised about $36bn of equity in twelve months. The US government ($5.7bn received), SoftBank ($2.0bn) and NVIDIA ($5.0bn) bought shares at $20.47 to 23.28 in 2025. In Aug 2026 Intel sold 242.1m shares at $95.00, about $23.0bn gross (8-K of 12 Aug 2026). Shares outstanding rose from 4.36bn in Mar 2025 to about 5.29bn. The US government holds up to 433.3m shares and a warrant for 240.5m more at $20.00.
5. Shares trade at 110x TTM non GAAP EPS. TTM non GAAP EPS was $1.09. At $120.23 the P/E is 79x annualized Q3 2026 guidance ($0.38 a quarter). TTM GAAP EPS was a loss of $2.11. The price is 3.3x the end 2025 close and 5.7x book value including the Aug 2026 offering.
6. Scenario values for end FY2029 are $4 (worst), $68 (base) and $164 (best) per share. Current price is 43x base case and 22x best case FY2029 core EPS. In the sensitivity analysis, core margin and the exit P/E move value the most.

Views on these results differ. Arguments for a lower valuation cite Foundry losses, the absence of a named external 14A customer in filings, share dilution, capital spending needs and a PC market expected to decline in 2026 (call). Arguments for a higher valuation cite Data Center and AI growth, 18A output ahead of target (call), the NVIDIA collaboration and US government support.

1 Revenue and business model

Intel designs and manufactures processors. Client Computing sells PC processors such as Core Ultra. Data Center and AI sells Xeon server processors and custom chips. Intel Foundry develops process technology and makes wafers, almost all for Intel Products. All Other includes Mobileye and, until Sep 2025, Altera.

• Process technology. Intel 18A entered high volume production at the start of 2026 and 18A-P entered risk production in Jun 2026. In Q2 2026 Intel committed to completing development of Intel 14A. The FY2025 10-K had warned that Intel might pause 14A without a significant external customer.
• Portfolio changes. Intel sold 51% of Altera to Silver Lake on 12 Sep 2025 for net consideration of $4.3bn and booked a $5.45bn gain. It closed the NAND sale to SK hynix in Mar 2025. On 8 Apr 2026 it bought back Apollo's 49% of the Ireland fab entity for $14.2bn.
• Customers. The three largest customers were 43% of FY2025 revenue: Dell 19%, Lenovo 12% and HP 12%. Billings to China were 24% of revenue.
• People. Headcount fell from 124,100 in Q3 2024 to 82,300 at 27 Jun 2026 after the 2024 and 2025 restructuring plans and the Altera sale.

2 Financial analysis and ratios

H1 2026 revenue rose 16.4% to $29.71bn. Core operating income, before acquisition costs and restructuring, was $3.13bn, against a loss of $1.16bn in H1 2025. The GAAP operating loss was $1.34bn and the net loss $14.76bn. The difference comes from a $3.9bn goodwill charge in Q1 and $13.6bn of losses on escrowed shares in H1.

3 MD&A, guidance and management commentary

Intel guided Q3 2026 revenue to $15.8bn to 16.8bn. At the midpoint it guided gross margin to 41.0% GAAP and 42.0% non GAAP, and EPS to $0.31 GAAP and $0.38 non GAAP. Releases guide one quarter ahead. Capital spending plans come from the call.

• MD&A, FY2025 10-K. Revenue was $52.85bn, flat on FY2024. Data Center and AI rose 5% and Client Computing fell 3% on the recast basis. Intel Foundry lost $10.32bn, against $13.29bn in FY2024. Gross capital spending fell to $17.7bn from $25.1bn.
• MD&A, Q2 2026 10-Q. Data Center and AI revenue rose 59% and segment operating income reached $2.47bn. Higher cost 18A wafers reduced product profit by $340m. The liability for escrowed shares was $15.6bn at 27 Jun 2026. Intel names the Iran conflict as a risk to its Israel fab.
• Earnings call, 23 Jul 2026 (third party transcript summaries). Management said demand exceeds supply for leading edge logic, wafers, memory and substrates. 18A output was about 25% above target. Management expects the PC market to fall by a low double digit % in 2026. It raised 2026 capital spending to above $20bn, with 2027 higher.
• Intel 14A (call). Risk production for internal products is planned for H2 2027 and volume production for 2028.

4 Sector and competitor analysis

Intel's year to date revenue growth of 16.4% is below Micron (203.0%), NVIDIA (95.8%), Broadcom (55.0%), AMD (44.1%) and Texas Instruments (20.8%). Its TTM gross margin of 38.6% compares with 53.2% at AMD and 74.7% at NVIDIA. Its capital spending of 21.2% of TTM revenue compares with 4.1% at AMD and 28.0% at Micron.

• x86 processors. Mercury Research reported AMD at 34.5% of server CPU units in Q2 2026, up from 27.3% a year earlier (as reported by The Register). IDC counted 68.2m PCs shipped in Q2 2026, a 4.9% decline from Q2 2025 (trade press).
• Foundry. TrendForce: TSMC had 72.5% of Q2 2026 foundry revenue; Intel is outside the top ten. TSMC had FY2025 revenue of $121.4bn, a 59.9% gross margin and $40.6bn capex.
• Government support. CHIPS Act funding totals $11.1bn (Aug 2025 press release): $2.2bn of earlier grants, $5.7bn paid for shares in Aug 2025 and $3.2bn under the Secure Enclave program. The Department of Commerce must vote its shares as the board recommends, with limited exceptions.
• Hyperscaler capital spending. Combined 2026 guidance of Microsoft, Amazon, Alphabet and Meta is about $720bn to 745bn (guidance as reported in press; Meta from its release).

6 Annual shareholder meeting, ownership and insider activity

Annual shareholder meeting, 13 May 2026

Shareholders elected all eleven directors and ratified the auditor. Say on pay received 86.9% support, up from 72.3% in 2025. Three shareholder proposals received 2.9% to 11.8%. Shares represented were 79.1% of the 5,021m outstanding.

• Board. Frank Yeary retired at the meeting and Craig Barratt became independent Chair. Steve Sanghi had the lowest support, 91.3%; Lip-Bu Tan had 99.3%.
• Pay. Lip-Bu Tan's reported FY2025 pay was $93.0m, of which $89.2m was stock and option awards, $53.5m of them new hire awards. The new hire performance shares pay only if the share price rises, with the target payout at twice the starting price. CEO pay ratio was 812 to 1, or 346 to 1 without one time awards (DEF 14A 0000050863-26-000061).

7 Share price and valuation history

EV to sales was 3.9x at the Dec 2025 close. It is now 11.4x TTM revenue and 10.4x model FY2026 revenue of $62.31bn. Market capitalization is $636bn on 5,286m shares, including the Aug 2026 offering. Closing prices over 52 weeks ranged from $33.62 (20 Nov 2025) to $140.94 (22 Jun 2026).

Critical factors behind the best case

Core assumptions and demand drivers

• Demand. Base case revenue grows 14%, 10% and 8%, against 16.4% in H1 2026. Best case adds external foundry revenue and faster Data Center and AI growth. Worst case uses 3%, 0% and (3%), as PC demand falls and share losses to AMD and Arm based chips continue.
• Margin. Core margin counts stock compensation (4.2% of TTM revenue) and depreciation (20.1%) as costs. In the base case it rises from 11.8% in FY2026 to 23% in FY2029. FY2021 core margin was 29.8%.
• Per share. The share count includes the Aug 2026 offering. It excludes the government warrant, which becomes exercisable only if Intel owns less than 51% of its foundry business.
• Excluded. Further share issues, acquisitions, impairments, changes in escrowed share value and changes in government funding.

9 Sensitivity analysis

One of the 25 combinations in Figure 9.1 exceeds $120.23: $125 at a 32x exit P/E and a 31% margin. Table 9.1 reaches at most $114.

Other sensitivities

• Escrowed shares. About 143m shares were in escrow at 27 Jun 2026 with a liability of $15.6bn. Each $1 move in the share price changes the liability by about $143m (computed).
• Dilution. Net share settlement of the government warrant at $120.23 would add about 201m shares, 3.8% of shares outstanding after the Aug 2026 offering (computed).
• Capital spending. TTM gross capital spending was $14.59bn (releases). Management guided 2026 spending above $20bn on the call.

Appendix: method, sources and definitions

• Data. Financial statements from XBRL in the 10-K for FY2021 to FY2025 and 10-Q filings for Q1 2025 to Q2 2026, retrieved through the SEC-API.io MCP server. Q4 2025 equals full year less the first nine months; quarterly cash flows are derived from year to date statements.
• Other sources. Earnings call of 23 Jul 2026 from Intel's prepared remarks and a third party transcript summary. Peer data from peer filings. Market prices: 30 Sep 2026.
• Definitions. FCF = operating cash flow less additions to property, plant and equipment. Core operating income = GAAP operating income plus acquisition costs and restructuring.
• Scenario model. EPS = (revenue x core margin less $2.0bn) x (1 less 11%) over diluted shares. Implied value = FY2029 EPS x exit P/E, undiscounted.