Intel Q2 earnings show loss as CEO says it must catch AMD and Arm

Intel Q2 earnings showed $16.1 billion in revenue, up 25% from a year earlier, but the company still reported losses as CEO Lip-Bu Tan told analysts Intel is working to catch and in some areas overtake AMD and Arm. The company said revenue, gross margin and earnings per share beat its guidance, while reporting an $11 billion GAAP loss and a $2.2 billion non-GAAP loss.

Tan described the quarter as another period of execution and said Intel has now exceeded its own financial expectations for seven straight quarters. The top-line beat does not change the harder competitive issue: Intel’s main server CPU business is under pressure from Arm-based cloud chips and AMD’s gains inside x86.

Tan said demand tied to AI is helping Intel’s product lines and its foundry ambitions. He said Intel’s server CPU franchise is growing quickly and described Xeon 6 as one of the company’s fastest-ramping products. Intel did not provide unit shipments in the remarks cited, and the claim sits against a server market that has become less dependent on Intel’s x86 franchise.

How is Intel trying to catch AMD and Arm?

Tan pointed to Intel’s upcoming Clearwater Forest, Diamond Rapids and Coral Rapids processors when Morgan Stanley analyst Joe Moore asked how the company planned to win back share. Tan acknowledged that Intel remains behind in some areas, but said the company is trying to catch up quickly and “leapfrog” parts of CPU architecture.

The competitive bar is high. IDC has found that non-x86 servers now account for almost half of server sales, helped by hyperscale customers designing and deploying their own Arm-based CPUs. AMD, meanwhile, has increased its position in the x86 server market to about one-third share, according to the figures discussed on the call.

For Intel, the next CPU roadmap has to do more than produce incremental refreshes. It has to give cloud buyers a reason to allocate workloads back toward Intel silicon while many of those same buyers are spending heavily on in-house chips, GPUs and AI infrastructure.

Intel says supply constraints are still limiting growth

Tan also said the chip industry is dealing with severe shortages across leading-edge logic wafers, memory and substrates, and that he expects those constraints to continue for the foreseeable future. For Intel specifically, he said wafer output across major manufacturing nodes exceeded expectations from 90 days earlier, and that yields on Intel 18A are ahead of target.

Supply is still tight, particularly in servers. Tan said Intel’s supply growth in the near term is weighted toward the end of the third quarter and into the fourth quarter, which implies some revenue opportunity remains gated by manufacturing availability rather than demand alone.

Intel also reiterated its foundry timeline. Tan said the company remains on track for 14A risk production for internal products in the second half of 2027 and decided in the second quarter to commit to a high-volume ramp in 2028. Intel did not name external customers tied to that 14A ramp in the remarks cited.

On 18A, Intel said the process is already in volume production for multiple commercial and consumer PC products. Tan argued that ramping 18A for Intel’s own products helps validate the process as Intel Foundry tries to sell manufacturing capacity to outside chip designers.

Why did Intel rename its PC business?

Intel has renamed its PC unit the Client Computing and Physical AI Group, or CCPG, reflecting a broader bet on edge AI and robotics. CFO David Zinsner said Intel believes the edge and physical AI opportunity could at least match the client total addressable market over time.

CCPG generated $8.9 billion in revenue in the quarter, up 13% year over year, and Intel said edge products accounted for 10% of that total. That puts current edge-related revenue at roughly $890 million for the quarter, far below the scale Intel is describing as possible over time.

Zinsner said the PC market is softer, partly because of memory dynamics, and forecast a weaker third quarter. That makes the edge and physical AI framing useful for Intel, but the company still has to show that robotics and edge AI can become a business comparable to PCs rather than a relabeled adjacency inside the client segment.

This story draws on original reporting from The Register.