Intel reported strong results for the first quarter of 2026, with revenue of $13.6 billion, up seven percent from a year earlier. Demand for Xeon server processors for AI data centers is growing faster than factories can keep up with. Before the financial markets opened, the stock price had already risen 29 percent.
Earnings per share were 29 cents, compared to an expectation of just 1 cent. For the current quarter, Intel expects revenue between $13.8 billion and $14.8 billion, while analysts had anticipated approximately $13 billion.
The strong results are largely driven by demand for Xeon server processors for AI data centers. These CPUs, typically general-purpose processors, are once again in high demand among companies looking to turn AI software into commercial services.
Factories are running at full capacity
CEO Lip-Bu Tan called it a “solid result” and emphasized that demand exceeds production capacity. “There is huge demand,” Tan said. “We are working very hard with our team to make sure we deliver, that we meet that demand but we are still short because the demand keeps increasing from the customers.”
To catch up, Intel is allocating more funds for manufacturing equipment. CFO Dave Zinsner reported that capital expenditures this year will remain at last year’s level, a shift from earlier plans to cut costs.
Demand is rising, but so is pressure on the PC market
In early April, Intel entered into a multi-year partnership with Google to supply Xeon processors for AI cloud infrastructure. Intel is shifting capacity from consumer device chips to server hardware, which could put pressure on the availability of cheaper PCs in 2026.
In addition to its server results, Intel managed to further restore its balance sheet through external investments. The company recently repurchased part of its Irish factory, which had previously been sold to generate liquidity. Gross margins stood at 41 percent in Q1; Intel expects 39 percent in Q2.
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