Intel Just Shocked Everyone, but Is the Stock Still a Buy?

Intel (NASDAQ: INTC) shocked the marketplace erstwhile its quarterly results zoomed past expert expectations. The banal has present astir doubled successful little than a month.

While analysts praised the 4th and Intel's CEO aft the results, it really looks overmuch much similar a lawsuit of the institution stumbling into a blistery inclination than thing else. Let's instrumentality a person look astatine the semiconductor stock.

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CPUs pb the mode

In its archetypal quarter, Intel benefited from the abrupt surging request for information halfway cardinal processing units (CPUs), which are needed to assistance negociate AI agents. The institution said the ratio of AI accelerators, similar graphics processing units (GPUs), to CPUs was closing owed to the displacement toward inference and agentic AI.

This helped pb to a 22% leap successful its AI (DCAI) merchandise gross to $5.1 billion. Its lawsuit computing radical (CCG) merchandise gross edged up 1% twelvemonth implicit twelvemonth to $7.7 billion, starring to full merchandise gross rising 9% to $12.8 billion.

Its foundry business, meanwhile, saw gross ascent 16% to $5.4 billion. However, the segment's operating losses stay elevated, with it seeing a nonaccomplishment of $2.4 cardinal successful the quarter. Revenue from Intel's different businesses plunged 33% twelvemonth implicit twelvemonth to $0.6 billion, mostly owed to the merchantability of 51% of its Altera subsidiary.

Overall gross for Intel roseate 7% to $13.6 billion, portion its adjusted EPS much than doubled to $0.29. That was good up of the $0.01 per-share nett connected $12.4 cardinal successful gross that analysts expected.

Below is simply a array of Intel's results by segments:

Data source: Intel. YOY = twelvemonth implicit year.

Notably, its gross margin, which has been nether pressure, saw improvement, up 250 ground points to 39.4%. Adjusted gross borderline roseate 180 ground points to 41%.

Looking ahead, the institution projected Q2 gross to beryllium betwixt $13.8 cardinal and $14.8 cardinal with adjusted EPS of $0.20. That was good up of the $0.09 successful EPS and $13.1 cardinal successful income that analysts were expecting. Adjusted gross margins were projected to beryllium astir 39%.

It expects machine request to beryllium anemic successful the 2nd fractional of the year. However, it projects that server CPU request volition stay beardown into 2027.