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INTEL CORP (INTC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $12.7B (flat YoY) and non-GAAP EPS was $0.13, both above prior guidance; GAAP EPS was $(0.19) .
  • Versus S&P Global consensus, Intel delivered a significant beat: revenue $12.67B vs $12.31B* and EPS $0.13 vs ~$0.00* ; Values retrieved from S&P Global.
  • Management lowered 2025 OpEx target to $17B (from $17.5B) and reduced 2025 gross capex target to $18B (from $20B), while maintaining net capex at $8–$11B .
  • Q2 2025 outlook is wide amid tariff/macro uncertainty: revenue $11.2–$12.4B, non-GAAP GM ~36.5%, and non-GAAP EPS $0.00 .
  • Strategic actions (org flattening, asset monetization including 51% Altera sale) and foundry execution (18A ramp in 2H25) are core near-term stock catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Non-GAAP gross margin (39.2%) and EPS ($0.13) exceeded internal guide, helped by stronger Xeon sales and mix toward Raptor Lake; CFO noted Q1 was “a solid start” despite macro uncertainty .
    • DCAI revenue rose 8% YoY to $4.1B; hyperscaler demand for host CPUs/storage compute outperformed expectations .
    • OpEx discipline: GAAP R&D+MG&A down 19% YoY (to $4.8B); non-GAAP down 15% (to $4.3B); management announced further structural cost reductions and org simplification .

  • What Went Wrong

    • Client Computing Group revenue fell 8% YoY to $7.6B; management cited competitive pressure, product mix, and consumer macro headwinds driving preference for N-1/N-2 parts (Raptor Lake) over higher-cost AI PC platforms (Meteor/Lunar) .
    • GAAP gross margin compressed YoY (36.9% vs 41.0%), reflecting cost/mix headwinds and startup costs for 18A ramp; Intel Foundry posted a $2.3B operating loss .
    • Tariff/regulatory risks prompted a wider Q2 guide and caution about potential TAM contraction, with management warning June could be softer despite a strong quarter start .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$13.284 $14.260 $12.667
Gross Margin % (GAAP)15.0% 39.2% 36.9%
Gross Margin % (Non-GAAP)18.0% 42.1% 39.2%
EPS (GAAP)$(3.88) $(0.03) $(0.19)
EPS (Non-GAAP)$(0.46) $0.13 $0.13
Q1 YoY MetricsQ1 2024Q1 2025YoY Change
Revenue ($USD Billions)$12.724 $12.667 Flat
Gross Margin % (GAAP)41.0% 36.9% Down 4.1 ppts
Gross Margin % (Non-GAAP)45.1% 39.2% Down 5.9 ppts
R&D + MG&A ($B, GAAP)$5.9 $4.8 Down 19%
Operating Margin (GAAP)(8.4)% (2.4)% Up 6 ppts
EPS (GAAP)$(0.09) $(0.19) Down 111%
EPS (Non-GAAP)$0.18 $0.13 Down 28%
Segment Revenue ($USD Billions)Q1 2024Q1 2025
Client Computing Group (CCG)$8.273 $7.629
Data Center & AI (DCAI)$3.828 $4.126
Intel Foundry$4.356 $4.667
All Other$0.643 $0.943
Intersegment Eliminations$(4.376) $(4.698)
Total Net Revenue$12.724 $12.667
Cash & Capex KPIsQ1 2024Q1 2025
Cash from Operations ($B, GAAP)$(1.223) $0.813
Adjusted Free Cash Flow ($B, Non-GAAP)$(6.178) $(3.680)
Gross Capex Additions ($B, GAAP)$(5.970) $(6.203)
Net Capex ($B, Non-GAAP)$(4.955) $(4.487)
Cash & Equivalents ($B)$6.923 $8.947
Total Debt ($B)—$44.911
Actual vs S&P ConsensusQ1 2025 ActualQ1 2025 Consensus*DeltaOutcome
Revenue ($USD Billions)$12.667 $12.313*+$0.354Beat
Primary EPS ($USD)$0.13 ~$0.00*+$0.13Beat
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025—$11.2–$12.4B New
Gross Margin % (Non-GAAP)Q2 2025—~36.5% New
EPS (Non-GAAP)Q2 2025—$0.00 New
Tax Rate (Non-GAAP)Q2 2025—12% New
OpEx (Non-GAAP)FY 2025$17.5B $17.0B Lowered
OpEx (Non-GAAP)FY 2026—$16.0B New Target
Gross Capex (GAAP)FY 2025$20.0B $18.0B Lowered
Net Capex (Non-GAAP)FY 2025$8–$11B $8–$11B Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI product roadmap (Gaudi/Xeon)Launched Gaudi 3; strong ecosystem interest Xeon 6/AI accelerators highlighted Reassessing AI portfolio; Jaguar Shores retained; workload-first approach Evolving/Refocus
18A/Foundry execution18A healthy; AWS commitments; plan to establish Intel Foundry subsidiary Tool install in Fab 52; CHIPS funding milestones 18A ramp 2H25; 14A PDK to lead customers; variants 18A-P/PT; focus on trust/customer service Progressing
Tariffs/macroNoted restructuring/impairments; macro risks Q1 outlook cautious due to macro uncertainties Wider Q2 guide; expect TAM contraction risk; June likely softer Deteriorating risk
Client PC mix—AI PC push; Panther Lake 2H25 Stronger demand for N-1/N-2 (Raptor Lake); Lunar/Meteor higher cost; Intel 7 capacity constrained Mixed; legacy mix favorable margins
Cost/OpEx discipline$10B cost reduction plan Continued efficiency; Q1 guide reflects macro OpEx cut to $17B FY25/$16B FY26; org flattening Accelerating
Balance sheet/deleveraging—CHIPS grants, partner contributions Monetizations (Altera 51% sale), deleveraging priority Strengthening

Management Commentary

  • CEO Lip-Bu Tan: “We are going back to basics by listening to our customers and making the changes needed to build the new Intel.”
  • CFO David Zinsner: “Non-GAAP gross margin was 39.2%, approximately 3 percentage points above our guidance… driven by stronger-than-expected demand for Raptor Lake, combined with improved cost for Meteor Lake.”
  • On OpEx cuts: “We now expect OpEx of $17 billion this year and $16 billion next year… eliminating bureaucracy, taking out the layers” .
  • On foundry priorities: “Success in foundry is first and foremost a customer service business built on foundational principle of trust… we are more rapidly embracing industry standard EDA tools and best design practices.”
  • On AI strategy: “Our goal will be to develop full stack AI solutions… enabling the next wave of computing defined by reasoning models, Agentic AI and physical AI.”

Q&A Highlights

  • Gross margin dynamics: Mix shift toward Raptor Lake aided Q1 margins; start-up costs for 18A and Lunar Lake package/memory will pressure margins through 2025; Panther Lake/18A wafer stacking benefits expected to improve margins in 2026 .
  • Foundry/customer trust: Priority is ramping Panther Lake on 18A, robust PDK/schedule, yield/reliability improvements, and adopting customer-centric EDA/tool flows .
  • Client demand and Intel 7 constraints: Stronger N-1/N-2 demand driven by consumer price points and macro/tariffs; Intel 7 constrained due to better-than-expected Raptor Lake demand .
  • OpEx path and restructuring: Targets include $17B (2025) and $16B (2026) with details to come; headcount impacts still being determined; spend to be reallocated to priority areas .
  • Capital allocation: Gross capex cut to ~$18B in 2025 by leveraging $50B of assets under construction; deleveraging is a priority .
  • Strategic monetization: Altera 51% sale to Silver Lake (valued at ~$8.75B) with deconsolidation expected in 2H25; OpEx targets currently include Altera until close .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $12.67B vs $12.31B* (+$0.35B) and EPS $0.13 vs ~$0.00* → Beat .
  • Q2 2025 street setup entering quarter: Consensus revenue ~$11.88B* and EPS ~$0.01* against company guidance $11.2–$12.4B and non-GAAP EPS $0.00; wider range underscores tariff/macro risk .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Strong Q1 beat driven by DCAI and Raptor Lake mix, but Q2 guide implies caution; watch tariff headlines and June demand trajectory .
  • Margin trajectory: Expect 2025 gross margin headwinds from 18A start-up and Lunar Lake costs; 2026 improves with Panther Lake on 18A and wafer margin stacking .
  • Cost discipline: OpEx and gross capex reductions are tangible catalysts for FCF improvement; adjusted FCF still negative, but trending better YoY .
  • Foundry credibility: 18A ramp in 2H25 and 14A engagement are key milestones; customer-trust execution (PDK, EDA, packaging) is critical to external revenue scaling .
  • PC mix/AI PC: Consumer price sensitivity favors N-1/N-2 in near term; commercial AI PC demand remains solid; monitor Panther Lake adoption vs macro/tariff headwinds .
  • Portfolio monetization: Altera transaction supports deleveraging and focus on core; deconsolidation in 2H25 should lower reported OpEx .
  • Trading lens: Stock likely reacts to cost actions and foundry milestones; risk skew near term around tariffs and Q2 delivery against a wide guide; medium-term thesis hinges on 18A execution and AI product competitiveness .