Intel Stock Soars 20% After Q1 Earnings Demolish Expectations

Intel (INTC) shares went up more than 20% after the market closed on Thursday. This was because the company reported its best quarterly performance in years, beating Wall Street's expectations across all key metrics and giving analysts so much good news that they had to quickly change their models upward.

The stock has already gone up more than 80% so far this year, following an 84% rise in 2025. It looks like it will soon break through levels not seen since the dot-com era.

These are the numbers that came up: Q1 revenue of $13.58 billion compared to the $12.42 billion average, adjusted EPS of 29 cents compared to the 1–2 cents that were expected, and Q2 revenue guidance of $13.8–14.8 billion, which is well above the $13.07–13.11 billion analyst estimate.

David Zinsner, Intel's CFO, said that the results showed "unprecedented demand" for chips that support AI. He also said that the company would have made more money if its supply chain had been able to keep up.

The CPU Renaissance Is the Story Nobody Saw Coming

The news story that will change the way people talk about the semiconductor business in 2026: data center sales rose 22% to $5.1 billion, thanks to higher demand for CPUs in AI workloads.

The once-sleepy CPU market has woken up completely as agentic AI workloads, which are autonomous systems that need steady, coordinated compute rather than short bursts of GPU processing, shift demand beyond Nvidia's GPU environment.

During the earnings call, CEO Lip-Bu Tan said, "The CPU is reinserting itself as the indispensable foundation of the AI era." "This isn't just our wishful thinking — it's what we hear from our customers."

That proof of demand is what led Intel to buy back a 49% stake in its Ireland chip fab for $14 billion, after selling it to Apollo Global Management. This is a strategic change that only makes sense if Intel thinks there will be steady demand for its manufacturing capacity at that facility for many years to come.

Foundry income increased 16% from the previous year to $5.4 billion, but Intel makes most of the chips that go through the foundry. Intel's most important execution job is still turning that internal use into a real customer base outside of Intel.

The Terafab Partnership: Intel's Most Significant New Customer

The relationship between Intel's foundry and Elon Musk's SpaceX, xAI, and Tesla may be the most important deal for Intel's long-term foundry goals.

Intel will join the Austin-based chip complex to "design, fabricate, and package ultra-high-performance chips at scale." Musk revealed that Tesla would use Intel's upcoming 14A process node for Terafab chip production on the company's Q1 earnings call the day before.

"By the time Terafab scales up, 14A will probably be fairly mature or ready for prime time," Musk said. Tan told Intel on the call that the 14A technology is being worked on faster than the 18A technology and that "multiple customers are actively evaluating" it.

The 14A node isn't expected to be built until 2028 or later. This means that Terafab is a long-term investment and not a short-term source of income. But getting Musk on board as a design partner while 14A is still being worked on gives Intel something it hasn't had in years: a trustworthy, well-known anchor customer ready to bet on next-generation Intel manufacturing.

Intel also stated that its partnership with Google would grow. Google agreed to use CPUs from multiple generations of Intel to run AI workloads in its data centers. Reports say that deals with Apple and Amazon may be on the way.

The Advanced Packaging Angle: A Quietly Powerful Differentiator

Advanced packaging, the process of connecting separate chip dies into bigger, more powerful systems, is an important part of Intel's comeback that doesn't get enough credit. Intel is one of only three companies in the world that has the most advanced packaging technology.

CFO Zinsner told CNBC that he now thinks advanced packaging will bring in billions of dollars per customer, which is a big jump from his previous estimate of hundreds of millions of dollars.

Amazon, Cisco, SpaceX, and Tesla are already Intel users for its advanced packaging. There are still problems in the AI chip supply chain at the packing level as well as the wafer fabrication level. Intel's ability to package chips may be a more durable competitive moat than its ability to make chips at low cost.

What's Still Broken — and Why It Matters

Intel's Q1 success doesn't fix the structural problems that led to years of poor performance. The business reported a net loss of $4.28 billion, which is more than the $887 million loss it had the previous year.

This is because restructuring costs, layoffs, and the cancellation of fab projects in Germany and Poland continue to hurt the stated finances. The Ohio factory won't open until 2030. 18It's still not clear why there aren't as many usable chips per wafer as the node's specifications say there should be.

In fact, some analysts are waiting for 14A yield data before they fully support the manufacturing turnaround theory.

Intel is still the only big company that uses its own 18A fabs, even though the node is technically the same as TSMC's 2-nanometer process.

Companies that have built whole product roadmaps around TSMC's reliability are hard to persuade to switch work to Intel Foundry. The sales process takes years, and there is no promise that the companies will switch.

The Q1 beat is structurally important, not just an oddity at the quarter level. 22% growth in data centers, supply-constrained revenue (meaning demand was higher than what Intel could meet), and Q2 guidance well above what most people expected make for a recovery story with real operating substance. The agreements between Terafab and Google back up the 14A roadmap in a way that internal confidence statements could never do.

The 20% jump after hours shows that the market sees Intel as more than just a comeback story. It is now a real player in the AI infrastructure. Execution risks include yield, getting new customers from outside the factory, and the path of net loss. These risks are real and should be watched. But Thursday's results put the onus of proof on bears instead of bulls.