Intel revenue forecast lifts shares as AI CPU demand rises

Intel revenue forecast topped expectations as data center CPU demand lifted the chipmaker's turnaround case and sent shares higher late Thursday.

The company said third-quarter sales will range from $15.8 billion to $16.8 billion. The bottom of that range sits above the cited average analyst estimate of $15.1 billion, giving investors a clearer signal that demand from large computing customers is feeding into Intel's core business.

Intel shares gained about 9% after the results were released. The move added to a rally that had already more than doubled the stock this year before the report, reflecting stronger confidence in Chief Executive Officer Lip-Bu Tan's recovery plan.

Data centers drive the beat

The strongest signal came from Intel's data center business, where sales rose 59% last quarter. That growth was more than twice the pace of Intel's total revenue increase, according to the company's figures, showing how sharply artificial intelligence infrastructure spending is changing the company's revenue mix.

Intel is not the main supplier of accelerator chips used to train and run artificial intelligence models. Nvidia Corp. still leads that market, but the wider build-out of AI computing capacity also requires central processing units, networking components, memory and manufacturing capacity.

Tan framed Intel's opportunity around CPUs inside data centers, where general-purpose chips work alongside accelerators. In an interview, he said, "Demand is outpacing our increasing supply, and so those are good problems to have."

Tan faces a supply test

The demand signal helps explain why Intel is preparing to spend more on manufacturing equipment. Chief Financial Officer Dave Zinsner said capital spending will be about $20 billion this year, despite an earlier plan to cut the budget from the prior year.

Zinsner also indicated that Intel is likely to raise spending again next year. The shift matters because Intel's comeback depends on two linked goals: selling more of its own chips and convincing outside customers to use its factories for outsourced production.

Tan said Intel is making progress in production, which should help it fill more orders and strengthen the case for its foundry business. He declined to identify specific customer agreements, but said the company has "multiple engagements" and should begin showing progress by early next year.

Capex raises the stakes

The immediate industry implication is that AI demand is spreading beyond graphics processors into a broader semiconductor supply chain. If cloud operators keep building data centers at the current pace, CPU availability could become a practical constraint for server deployments, not just a supporting detail.

For Intel, the upside case is straightforward: if demand holds and factory execution improves, higher equipment spending can translate into more shipments, stronger customer confidence and a clearer path for the foundry strategy. That would make the company less dependent on a single product cycle and more exposed to the industry-wide race to add computing capacity.

The risk case is just as concrete. If supply remains tight or manufacturing improvements arrive slower than planned, Intel may carry higher capital spending without converting enough demand into revenue, while customers could shift orders toward rivals or delay deployments.

At the global level, continued AI infrastructure investment would support semiconductor equipment orders, server supply chains and data center construction. If the cycle cools or financing costs pressure customers, Intel's higher capex plan would leave less room for error, while the broader chip sector would face a sharper test of how much AI-related demand is durable.