Intel Corp (INTC) Q2 2025 Earnings Call Highlights: Revenue Surpasses Expectations Amid ...

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Revenue: $12.9 billion, above the high end of guidance.
Non-GAAP Gross Margin: 29.7%, impacted by $800 million in non-cash impairment and $200 million in one-time period costs.
Non-GAAP EPS: Minus $0.10, excluding charges would have been $0.10.
Operating Cash Flow: $2.1 billion.
Adjusted Free Cash Flow: Negative $1.1 billion.
Cash and Short-term Investments: $21.2 billion.
Intel Products Revenue: $11.8 billion, slightly up sequentially.
CCG Revenue: Up 3% quarter-over-quarter.
DCAI Revenue: Down 5% sequentially.
Intel Foundry Revenue: $4.4 billion, down 5% sequentially.
Operating Profit for Intel Products: $2.7 billion, 23% of revenue.
Intel Foundry Operating Loss: $3.2 billion, down $848 million sequentially.
All Other Revenue: $1.1 billion, up 12% sequentially.
Q3 Revenue Guidance: $12.6 billion to $13.6 billion.
Q3 Gross Margin Guidance: Approximately 36%.
2025 OpEx Target: $17 billion.
2026 OpEx Target: $16 billion.
2025 Gross Capital Investment: Approximately $18 billion.
Net CapEx Forecast: $8 billion to $11 billion for 2025.
Warning! GuruFocus has detected 7 Warning Signs with INTC.
Release Date: July 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Intel Corp (NASDAQ:INTC) reported Q2 revenue above the high end of its guidance, reflecting strong demand across its business.
The company is making progress on its foundry strategy, focusing on building trust with customers and ensuring high-quality, reliable wafer delivery.
Intel Corp (NASDAQ:INTC) is committed to improving its balance sheet, with actions taken to reduce operating expenses and improve execution.
The company is focused on launching its Panther Lake SKU by year-end, which is expected to solidify its strong share in the notebook market.
Intel Corp (NASDAQ:INTC) is actively engaging with external ecosystem partners to improve yield and performance targets for its Intel 18A technology.
Negative Points
Headline profitability was impacted by several one-time items and impairments, affecting overall financial performance.
The company faces challenges in the high-end desktop market and needs to improve its position in broader hyperscale workloads.
Intel Corp (NASDAQ:INTC) has decided not to continue with manufacturing projects in Germany and Poland, indicating potential setbacks in its expansion plans.
The company recognized approximately $800 million of non-cash impairment and accelerated depreciation charges related to excess prior generation tools.
Intel Corp (NASDAQ:INTC) is experiencing capacity constraints in Intel 7, which are expected to persist through the second half of the year.
Q & A Highlights
Q: Lip-Bu, how fast can you fix the x86 side of the business to build trust for the foundry business? A: Lip-Bu Tan, CEO: We are focusing on the 18A technology, with steady progress on yield and performance targets. The engagement with external ecosystem partners is helping us improve, and we are confident in launching our Panther Lake SKU by year-end. Building trust with customers involves demonstrating reliability and delivering on time and at scale.
Q: Dave, can you elaborate on the reasons for the sequential decline in gross margin guidance and the outlook for next year? A: David Zinsner, CFO: The main driver is the ramp of Lunar Lake, which impacts gross margins due to the cost structure. Panther Lake's early-stage maturity also contributes to higher costs. However, as yields improve and volumes increase, we expect this to become a tailwind. Foundry gross margins are expected to expand next year, and product cost structure improvements will also help.
Q: Lip-Bu, how do you address concerns about the 14A development and its impact on the foundry strategy? A: Lip-Bu Tan, CEO: We are focused on building the foundational technology for 14A and engaging with customers early in the process. We are committed to the foundry business but will only invest in CapEx when we see customer volume commitments and performance milestones met. This disciplined approach ensures we deliver reliable results to our customers.
Q: Dave, what is the outlook for CapEx next year, and how much can you reduce it? A: David Zinsner, CFO: We expect CapEx to decrease next year as we digest previous investments. While maintenance CapEx is about half of our current level, we anticipate spending more than $9 billion but less than $18 billion. We will finalize our CapEx plans in early 2026.
Q: Lip-Bu, can you expand on Intel's AI strategy and how it plans to compete in the market? A: Lip-Bu Tan, CEO: We are focusing on inference and agentic AI, aiming to provide a full stack solution from system software to silicon. We plan to leverage our x86 franchise and explore new architectures, including working with startups and system companies for purpose-built AI platforms. We will share more details on our strategy in the coming months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.