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INTEL CORP (INTC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue beat but profitability was pressured by one‑time charges: Revenue $12.86B vs S&P Global consensus ~$11.88B; non‑GAAP EPS $(0.10) vs consensus ~$0.01 due to ~$1.0B impairments/period costs not included in guidance; excluding these, non‑GAAP EPS would have been ~$0.10 and non‑GAAP GM ~37.5% (above guide) . Consensus values from S&P Global.*
  • Large restructuring to reset cost base: $1.9B charges (15% core workforce reduction), GAAP EPS impact $(0.45); non‑cash tool impairments ~$0.8B and one‑time period costs ~$0.2B reduced GM by ~800 bps .
  • Guidance: Q3 revenue $12.6–$13.6B; non‑GAAP GM ~36%; non‑GAAP EPS $0.00; non‑GAAP OpEx targets reaffirmed ($17B 2025, $16B 2026); 2025 gross CapEx held at $18B with footprint rationalization (no Germany/Poland; consolidate Costa Rica; slow Ohio) .
  • Stock reaction catalysts: Clear revenue upside and cost reset vs EPS optics from one‑offs; conservative 2H stance tied to tariffs/Intel 7 constraints; upcoming Panther Lake ramp and AI narrative reset could swing sentiment near‑term .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue outperformed guidance on broad demand; client refresh and host CPU demand in AI servers aided upside .
    • Underlying margins/earnings were better than optics: “Excluding” the ~$1.0B non‑GAAP GM headwinds, non‑GAAP GM would have been ~37.5% and non‑GAAP EPS ~$0.10, both ahead of guide .
    • Execution/roadmap milestones: 18A started production wafers in Arizona; Xeon 6 tied into NVIDIA DGX B300 as host CPU; Panther Lake on track to ship initial SKU by year‑end .
    • Leadership hires to accelerate commercial and AI execution (CRO and AI SoC/networking leaders) .

  • What Went Wrong

    • Headline profitability compressed: non‑GAAP GM 29.7% (–900 bps YoY) and non‑GAAP EPS $(0.10), driven by impairments/period costs; GAAP loss widened with $1.9B restructuring .
    • Intel 7 capacity remained tight, constraining Foundry and shaping mix; mix/packaging dynamics (Lunar Lake with memory‑in‑package) weigh on reported GM into Q3 .
    • Conservative 2H posture amid tariff uncertainty and below‑seasonal outlook; Q3 guided to break‑even non‑GAAP EPS despite revenue midpoint growth .

Financial Results

Headline vs consensus (Q2 2025)

MetricQ2 2025 ActualS&P Global ConsensusNotes
Revenue ($B)$12.86 $11.88*Above consensus
Non-GAAP EPS ($)$(0.10) $0.01*Below consensus due to one‑offs; ex‑charges ≈ $0.10
GAAP EPS ($)$(0.67) n/aIncludes $1.9B restructuring

Sequential trend (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($B)$14.26 $12.67 $12.86
GAAP Gross Margin (%)39.2% 36.9% 27.5%
Non‑GAAP Gross Margin (%)42.1% 39.2% 29.7%
GAAP EPS ($)$(0.03) $(0.19) $(0.67)
Non‑GAAP EPS ($)$0.13 $0.13 $(0.10)
Cash from Operations ($B)$3.17 $0.81 $2.05

YoY comparison

MetricQ2 2024Q2 2025
Revenue ($B)$12.83 $12.86
GAAP Gross Margin (%)35.4% 27.5%
Non‑GAAP Gross Margin (%)38.7% 29.7%
GAAP EPS ($)$(0.38) $(0.67)
Non‑GAAP EPS ($)$0.02 $(0.10)
Net Income (Loss) Attrib. to Intel ($B)$(1.61) $(2.92)

Segment revenue (oldest → newest)

Segment Revenue ($B)Q2 2024Q2 2025
Client Computing Group (CCG)$8.14 $7.87
Data Center & AI (DCAI)$3.81 $3.94
Intel Foundry$4.28 $4.42
All Other$0.88 $1.05
Intersegment Eliminations$(4.28) $(4.42)
Total Net Revenue$12.83 $12.86

KPIs and investment (oldest → newest)

KPIQ4 2024Q1 2025Q2 2025
Non‑GAAP R&D + MG&A ($B)$4.63 $4.27 $4.32
Gross CapEx ($B)$4.67 $6.20 $4.49
Adjusted Free Cash Flow ($B)$(1.50) $(3.68) $(1.05)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—$12.6–$13.6B New
Non‑GAAP Gross MarginQ3 2025—~36.0% New
Non‑GAAP EPSQ3 2025—$0.00 New
Non‑GAAP OpExFY 2025$17.0B (cut in Q1) $17.0B (reaffirmed) Maintained
Non‑GAAP OpExFY 2026$16.0B (set in Q1) $16.0B (reaffirmed) Maintained
Gross CapEx (GAAP)FY 2025$18B (cut from $20B in Q1) $18B (reaffirmed) Maintained
CHIPS/Partner OffsetsFY 2025Incentives $3–$5B; Partner $4–$5B Incentives $3–$5B; Partner $4–$5B Maintained
Tax Rate (Non‑GAAP)Q3 2025—12% New

Operational footprint actions (context for CapEx): cancel Germany/Poland projects; consolidate Costa Rica AT to VN/MY; slow Ohio pace .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/Technology strategyQ4: AI PC momentum; Xeon 6 + accelerators; 18A ramp plan . Q1: Full‑stack AI focus (inference/agentic), workload‑first; refine roadmap .Maintain workload‑first, target inference/agentic AI; Xeon 6 selected as host CPU for NVDA DGX B300; 18A production wafers started; Panther Lake on track .Improving execution narrative
Foundry/capacity & CapExQ4: Foundry standalone structure; CHIPS funds; 18A tape‑out . Q1: Cut 2025 CapEx to $18B; highlight Intel 7 constraints .Tighter financial discipline: cancel Germany/Poland; consolidate Costa Rica; slow Ohio; still $18B CapEx; Intel 7 tight; 18A progress .More disciplined, constrained near‑term
Client PC demand & rampsQ1: Raptor Lake strong; AI PC ramp slower off lower Q1; Lunar/Panther plan .Raptor Lake continues to drive Intel 7 tightness; significant Lunar Lake ramp in Q3 depresses GM; Panther Lake initial SKU by year‑end .Mixed: demand strong, margin optics pressured
Server CPU competition/shareQ1: Stabilize share; Granite Rapids ramp; hyperscaler host CPU strength .Granite ramp continuing; share improvement will take time; focus on perf/watt and SMT; ARM competition acknowledged .Gradual, multi‑quarter fix
Tariffs/MacroQ1: Tariff uncertainty; conservatism into 2H .Revenue aided by customer hedging; below‑seasonal 2H planning continues .Persistent headwind

Management Commentary

  • “Our operating performance demonstrates the initial progress we are making to improve our execution and drive greater efficiency… build a more financially disciplined foundry.” — Lip‑Bu Tan, CEO .
  • “Excluding [~$800M impairments and ~$200M period costs], our second quarter non‑GAAP gross margin would have been 37.5%, and non‑GAAP EPS would have been $0.10, both ahead of our Q2 guidance.” — David Zinsner, CFO .
  • “Going forward, we will grow our capacity based solely on volume commitments and deploy CapEx in lockstep with tangible milestones… we have decided not to continue with our manufacturing projects in Germany and Poland… consolidate Costa Rica… slow construction in Ohio.” — Lip‑Bu Tan .
  • “We reduced management layers by ~50%… on track to year‑end target of 75,000 employees.” — Lip‑Bu Tan .

Q&A Highlights

  • Foundry roadmap discipline: 14A will be driven by customer‑defined KPIs with CapEx only after yield/performance and customer volume commitments; 18A to support at least three product generations; external customers likely in waves after internal ramp .
  • Gross margin trajectory: Q3 GM headwinds from Lunar Lake memory‑in‑package optics and early Panther Lake costs; tailwinds later as Panther volume/yields improve and foundry leading‑edge ramps expand margins .
  • CapEx outlook: FY25 ~$18B; ~half considered sustaining at this level; 2026 meaningfully below $18B but above ~$9B “maintenance” ballpark; leveraging construction‑in‑progress lowers gross CapEx over time .
  • Intel 7 constraints: Strength in Raptor Lake drives tightness; Intel 4 (Meteor/Granite) ramps help shift mix; factory constraint can aid unit cost, but mix optics persist .
  • Server competition/share: Focus on perf/watt, SMT correction, and simplified SKUs; acknowledge ARM competition; aim to stabilize then improve share with Granite/Diamond .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Revenue $12.86B vs ~$11.88B*; non‑GAAP EPS $(0.10) vs ~$0.01*; EBITDA ~$2.52B vs $2.83B* . CFO emphasized EPS/gross margin would have exceeded guide excluding non‑GAAP GM headwinds ($1.0B) .
  • Q3 2025 company guidance implies non‑GAAP GM ~36% and EPS $0.00 vs conservatism on tariffs/mix; watch for Panther Lake ramp impact and Intel 7 constraint resolution .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Underlying demand is firm (client refresh; host CPU in AI servers), but margin optics are depressed by one‑time non‑GAAP GM items and packaging/mix; look through to underlying ~37.5% non‑GAAP GM ex‑charges in Q2 .
  • Structural cost reset is tangible (15% core workforce reduction; OpEx targets reiterated); monitor cash timing of severance (primarily Q3) and free cash flow trajectory .
  • Foundry strategy pivot to financial discipline and customer‑led capacity is credible; near‑term impact includes canceled EU projects and slower Ohio, with potential to de‑risk returns .
  • Near‑term stock drivers: Q3 non‑GAAP breakeven EPS guide; tariff policy outcomes; Lunar Lake mix impact on GM; delivery of Panther Lake by year‑end .
  • Medium‑term thesis hinges on 18A execution (client/server) and regaining server competitiveness (perf/watt, SMT) while shaping a clearer AI systems/software stack in inference/agentic AI .
  • Balance sheet actions (Mobileye selldown; pending Altera deconsolidation) help liquidity and deleveraging; expect Altera to move to equity‑method post‑close with NCI dynamics in 2H .
  • Intel 7 capacity tightness is a double‑edged sword—supports factory cost leverage but constrains mix; track Intel 4/18A ramps to alleviate bottleneck and lift consolidated margins .