Intel posted 25% revenue growth in the second quarter, its fastest in more than 15 years, yet the stock fell on Friday after an early after-hours jump. A steep run-up over the past year and a rich valuation left the beat little room to push shares higher.
Intel delivered the strongest quarter of its turnaround, then watched the reward evaporate. Revenue rose 25% year over year to $16.1 billion, the chipmaker’s fastest quarterly growth in more than 15 years and far above management’s April forecast, which topped out at $14.8 billion. The stock closed Thursday at $100.23, jumped about 12% in after-hours trading, then gave back the gain on Friday and slipped below that close.
The reversal stands out because the numbers marked a real break from recent quarters. Intel’s revenue was roughly flat in 2025 and grew just 7% year over year in the first quarter of 2026.
Where the growth came from
Intel’s data center and AI segment led the quarter, with revenue up 59% year over year to $6.3 billion, accelerating from 22% growth in the first quarter. The gains were broad: client computing and physical AI revenue rose 13% to $8.9 billion, while the foundry segment grew 31% to $5.8 billion.
Profitability may be the more striking part of the report. Adjusted gross margin reached 41.8%, up 12.1 percentage points from a year earlier, and adjusted operating margin swung to 17.2% from negative 3.9%. Adjusted earnings per share came in at $0.42, against a $0.10 adjusted loss a year earlier, producing $2.2 billion of adjusted net income and $7.0 billion in operating cash flow.
The report also carried a reported net loss of $11.0 billion. That figure reflects a $12.5 billion non-cash charge tied to shares Intel holds in escrow under its CHIPS Act agreement with the U.S. government, an accounting item rather than a cash cost.
The price already assumes more quarters like this
Intel’s guidance pointed to continued momentum. Management forecast third-quarter revenue of $15.8 billion to $16.8 billion and adjusted earnings per share of $0.38, implying about 19% year-over-year growth at the midpoint.
The company is spending to keep pace. According to The Motley Fool, CFO Dave Zinsner said Intel is “meaningfully increasing our investments in equipment, clean room space, and substrates.”
Yet the strain shows up in the valuation. Shares traded below $20 within the past year and trade around $96 now, leaving a market capitalization of about $480 billion.
Annualize the current and guided adjusted earnings pace, and the stock trades at about 60 times that figure. The quarter proved the turnaround is real, but the price demands that quarters like this become the norm.
Source: The Motley Fool
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