Intel INTC) stole the show in this week’s earnings lineup, which also included Q1 results from Tesla TSLA), Lockheed Martin LMT) and other prominent leaders in their respective industries.
However, Intel delivered big on its promising turnaround, which has been spurred by investments from the U.S. government, Nvidia NVDA), and Softbank SFTBY).
The comeback story has also centered around a perfect alignment of market forces and internal execution, with Intel reestablishing itself as a major competitive force in the AI-driven semiconductor landscape.
Delivering a strong Q1 report yesterday evening, Intel’s stock surged 23% in Friday’s trading session and is now sitting on monstrous gains of +300% in the last year.
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Demand for CPUs Propels Intel
Intel is benefiting from a major shift in AI workloads toward inference and agentic computing, which rely heavily on central processing units (CPUs) rather than on graphics processing units (GPUs).
CPUs have historically been Intel's core focus as a chipmaker and are considered the brains of computers, executing instructions, performing calculations, and managing data flow to run programs and operating systems.
Keeping this in mind, Intel’s Data Center & AI revenue jumped 22% year over year to $5.1 billion, lifting Q1 sales 7% to $13.57 billion and comfortably eclipsing estimates of $12.33 billion by 10%
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More importantly, has been Intel’s return to profitability, posting two straight profitable quarters with Q1 GAAP net income at $760 million. On an adjusted basis, this translated into Q1 EPS of $0.29, crushing expectations of $0.01 and rising from $0.13 per share a year ago.
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Intel’s Positive Guidance
Adding fuel to the rally was Intel’s near-term outlook, forecasting Q2 sales at $13.8-$14.8 billion and well ahead of Wall Street's expectations of $12.95 billion or nearly 1% growth.
Even better, Intel expects current quarter adjusted EPS to be $0.20, blowing away consensus expectations of $0.07 and reflecting a sharper rebound from an adjusted loss of -$0.10 a share in Q2 2025.
Conclusion & Final Thoughts
Intel is certainly riding the AI wave, and the growing need for CPUs as it relates to AI inferencing and agentic computing is guiding its return to prominence. Optimistically, Intel CEO Lip-Bu Tan has emphasized that CPUs are becoming the “indispensable foundation of the AI era.”
More reassuring in regards to the incredible rebound in Intel’s stock being sustainable is that the chipmaker is positioned for multiple expansions, both strategically and financially, based on its current transformation and market trajectory.
For now, Intel stock lands a Zacks Rank #3 (Hold), but it wouldn't be surprising if a buy rating is on the way with FY26 and FY27 EPS estimates likely to trend higher following its strong Q1 results and positive guidance.
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This article originally published on Zacks Investment Research (zacks.com).