Performance Crushes Expectations, CPU Strategic Value Validated! Under the leadership of Chen Liwu, Intel Corporation (INTC.US) has embarked on a transformation from "survival" to "expansion".

Intel Corporation (INTC.US) has announced first quarter results and second quarter performance guidance that far exceed market expectations, indicating that this long-struggling chip manufacturer is benefitting from the massive wave of artificial intelligence (AI) infrastructure construction. The financial report shows that Intel Corporation's first quarter revenue increased by 7% year-on-year to $13.6 billion, significantly higher than the analysts' average expectation of $12.4 billion. Non-GAAP net profit was $1.5 billion, a year-on-year increase of 156%; adjusted earnings per share were $0.29, a year-on-year increase of 123%, also significantly higher than the analysts' average expectation of $0.01. The gross margin was 41.0%, compared to 39.2% in the same period last year. By business segment, Client Computing Group (CCG) revenue was $7.7 billion, up 1% year-on-year; Data Center and AI (DCAI) revenue was $5.1 billion, up 22% year-on-year; and Foundry revenue was $5.4 billion, up 16% year-on-year. Meanwhile, Intel Corporation expects second quarter revenue to be in the range of $13.8 billion to $14.8 billion, with a mid-point forecast of $14.3 billion, significantly higher than the analysts' average expectation of $13 billion; adjusted earnings per share for the second quarter are expected to be $0.20, also significantly higher than the analysts' average expectation of $0.09; and the second quarter gross margin is expected to be 39%. Boosted by the strong performance, as of the time of writing, Intel Corporation's stock surged over 19% in after-hours trading on Thursday. Prior to this, the stock had already risen by nearly 81% so far this year. This optimistic outlook indicates that Intel Corporation CEO Patrick Gelsinger is making progress in driving a challenging revitalization plan. After introducing massive investments and strengthening the company's balance sheet last year, he is now delivering on promises to improve operations. Intel Corporation investor and Great Hill Capital chairman Thomas Hayes said, "Everyone is starting to shift orders to Intel Corporation, and I think we are still in the early stages. Market sentiment has gone from despair to frenzy in a very short period of time." Gelsinger stated that Intel Corporation has delivered a "solid report card" and exceeded expectations. He expects the demand for processors for AI systems to continue to expand and said that the company is "highly focused" on increasing factory output, as they are still unable to meet all the orders. Gelsinger remarked, "The demand is tremendous. We are working very hard to ensure delivery and meet demand, but there is still a gap because customer demand is continuing to grow." In addition to the progress in production, Gelsinger has also repaired Intel Corporation's balance sheet through external investments, allowing the company to buy back the Irish factory stake it had previously sold for funding. This buyback is seen by investors as a signal of confidence in the future. Gelsinger mentioned that compared to when he took over as CEO last year, Intel Corporation is now a "fundamentally different company." He said, "A year ago, the discussion about Intel Corporation was about whether we could survive. Today, the discussion is about how fast we can expand manufacturing capabilities, increase supply, and meet the huge demand for our products." Intel Corporation CFO Dave Sinatra indicated that the company's spending on new production equipment will exceed the initial budget. The company has ample factory space and will increase equipment utilization. He stated that capital expenditure is currently expected to be basically flat compared to last year, despite the company previously announcing spending cuts. Despite delivering strong results, Intel Corporation still has a long way to go to regain its former dominance in the chip industry. The company's revenue last year was $53 billion, about $25 billion lower than the peak in 2021. Wall Street estimates a revenue growth of only 3% by 2026. CPU back in the spotlight in the era of intelligent agents The financial report shows that the demand for data center chips to support the construction of AI infrastructure on a massive scale is boosting sales of Intel Corporation's flagship Xeon server processors. These general-purpose semiconductors - central processing units (CPUs) - are once again a focus for enterprises as they help translate AI software into revenue-generating services. Gelsinger stated that AI is entering the real world through physical AI, Siasun Robot & Automation, and Edge AI, with CPUs once again becoming the foundation of AI. In the past two years, the narrative of the AI industry chain has been dominated by GPUs, and CPUs have had weak presence in AI servers. The reason for this is that during the training era, the most critical bottleneck was parallel computing power, with GPUs handling the heaviest matrix operations while CPUs were responsible for general control and basic scheduling work. However, with the explosive growth of intelligent agents and reinforcement learning (RL) workloads, the strategic position of CPUs in data centers is undergoing a structural reevaluation. The essence of intelligent agents is not to provide longer answers to questions, but to break down a request into a set of workflows. Models no longer just generate one answer, but execute a process. Once AI transitions from "calculating once" to "running processes," the system's reliance on CPUs significantly increases. This is because many critical workloads are not suitable for GPUs. Tasks such as task scheduling, thread management, process management, sandbox execution, pre- and post-processing, cache coordination, and state maintenance are all typical CPU tasks. Especially in multi-agent collaborative scenarios, where multiple intelligent agents run concurrently, call each other's tools, share states, and demand higher core numbers, thread numbers, single-core performance, and memory management capabilities from CPUs. Dylan Patel, Chief Analyst of well-known semiconductor analysis firm SemiAnalysis, bluntly stated in a deep interview on April 8th that the paradigm shift of AI workloads from simple text generation to complex intelligent agents and reinforcement learning evolution has created a "extremely serious capacity shortage" for CPUs. The latest report from market research firm TrendForce confirms this assessment - the current CPU-to-GPU ratio in AI data centers is about 1:4 to 1:8, but in the era of intelligent agents, this ratio is expected to evolve to 1:1 to 1:2. In terms of market size, Creative Strategies predicts that the data center CPU market will grow from $25 billion in 2026 to $60 billion in 2030; if combined with intelligent agent-related demand, the scale is expected to approach $100 billion. This structural shift has triggered a chain reaction on both the supply and demand sides. Intel Corporation and AMD have raised prices for some CPU product lines in the first quarter of 2026. At the same time, NVIDIA Corporation and Arm both announced their entry into the server CPU market in March 2026 - the decision of a GPU giant and an IP licenser to make the same choice in the same month is not a coincidence but a concentrated release of market signals. Intel Corporation's Xeon processors have long held more than 95% of the data center CPU market share. However, this dominant position began to loosen from 2021 - issues with the Intel 7 process led to delays in the release of Xeon Sapphire Rapids, opening up a market gap for AMD's EPYC Milan. Intel Corporation plans to launch two flagship products in 2026. One is the Xeon 6+ (Clearwater Forest) based on the Darkmont architecture, with 288 cores/288 threads and a TDP of approximately 450W; the other is the Xeon 7 (Diamond Rapids) based on the Panther Cove-X architecture, with up to 256 cores/256 threads and a TDP of up to 650W. These two products are based on Intel Corporation's most advanced 18A process and introduce the Foveros Direct hybrid bonding technology for the first time. However, TrendForce pointed out that due to ongoing issues with the 18A process yield, the volume production of these two products may be delayed to 2027. In contrast, competitor AMD's pace is more steady, with its flagship product EPYC Venice in 2026 adopting the Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR N2 process and Zen 6 architecture, and featuring CoWoS-L and SoIC advanced packaging, achieving 256 cores/512 threads through simultaneous multithreading (SMT) technology - the highest thread count in the current market. TrendForce predicts that AMD will continue to eat away at Intel Corporation's market share in 2026. In addition to the two giants Intel Corporation and AMD, a group of non-traditional players are rapidly entering the server CPU race at an unprecedented speed, seeking to fundamentally change the competitive landscape. In March, NVIDIA Corporation announced the Vera CPU as a standalone product to meet customer demands for more flexible CPU:GPU configurations. Vera uses NVIDIA Corporation's in-house Olympus architecture, based on the Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR N3 process and CoWoS-R packaging, offering 88 cores/176 threads and equipped with 1.8 TB/s of NVLink-C2C interconnectivity, enabling memory sharing with NVIDIA Corporation GPUs. NVIDIA Corporation also launched the Vera CPU rack, with each rack integrating 256 CPUs, totaling 22,528 cores/45,056 threads with a total memory of 400 TB. Similarly, in March, Arm announced the launch of its first in-house CPU product, the Arm AGI CPU, ending its 35-year history as a pure licenser. This product is based on the Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR N3 process and Neoverse V3 architecture, offering 136 cores/136 threads, a TDP of 300W, and supporting DDR5-8800 memory and PCIe Gen6. Arm also simultaneously launched two rack configurations: an air-cooled version integrating 60 AGI CPUs (8,160 cores, approximately 180 TB of memory), and a liquid-cooled version supporting 336 CPUs (45,696 cores, 1 PB of memory). Major cloud service providers (CSPs) are also accelerating their self-developed CPU layouts. In December 2025, Amazon.com, Inc. (AMZN.US) AWS released the Graviton5 (192 cores/192 threads) based on the Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR N3 process and deployed in tandem with the company's Trainium 3 AI ASIC to reduce AI computing costs. Microsoft Corporation (MSFT.US) launched the Cobalt 200 (N3 process, 132 cores/132 threads) in November 2025. Alphabet Inc. Class C plans to release the bare metal version of the Axion C4A.metal and the next generation Axion N4A in 2026, targeting the best performance-to-cost ratio. Intel Corporation celebrates a major victory: the 14A process secures its first major customer Further boosting market sentiment, Tesla, Inc. (TSLA.US) CEO Elon Musk announced on Wednesday that the company plans to use Intel Corporation's advanced 14A manufacturing process to produce chips for its Terafab chip project. This makes Tesla, Inc. the first major customer of Intel Corporation's 14A technology. This is a significant breakthrough for Intel Corporation - the company is striving to transform its business to attract external customers to use its chip manufacturing technology. The upcoming 14A chip manufacturing process from Intel Corporation aims to compete with industry-leading competitor Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, but no significant external customers had been disclosed before. According to data previously disclosed by the company, the 14A process is expected to bring a 15-20% performance improvement, a 30% increase in density, and a 25-35% reduction in power consumption compared to the 18A process. Earlier this month, Intel Corporation announced that it would join Musk's TeraFab chip project, partnering with SpaceX, xAI, and Tesla to help reshape silicon wafer manufacturing technology. Musk stated on Tesla, Inc.'s earnings call, "Considering the scale at which Terafab will produce when it achieves scale production, the 14A process is probably quite mature and can be used on a large scale, so adopting 14A seems like the right choice, and we have a good working relationship with Intel Corporation." This collaboration is expected to boost investor confidence in Intel Corporation's next-generation manufacturing technology after the company faced challenges with chip yields in the past. Ben Bajarin, principal of the technology consulting firm Creative Strategies, stated that Intel Corporation's 14A technology is "probably more important for Intel Corporation than people realize." He said, "It is crucial to bring in multiple partners as early design partners to help streamline the process and accumulate the experience needed for advanced processes. Tesla, Inc. undoubtedly has the capacity for large-scale production and is an ideal first external customer for Intel Corporation." Although many details of the Terafab chip project - such as who will fund the purchase of expensive chip manufacturing equipment, who will operate the factory, and when the project will start production - are still unknown, Jay Goldberg of investment research firm Seaport Research Partners stated that Musk's vote of confidence in Intel Corporation's technology has overshadowed these unknown factors. Musk has stated that Terafab will eventually achieve an annual computing power output of 1 terawatt. According to estimates by Bernstein Investment Bank, capital expenditure to build chip capacity supporting an annual 1 terawatt computing power could range from $5 trillion to $13 trillion. Jay Goldberg stated that it is uncertain whether Musk's grand prediction for future Siasun Robot & Automation chip demand can be realized, but even if only producing chips for Tesla, Inc.'s existing business, it is still a significant victory for Intel Corporation. He stated, "In terms of chip usage scale, they (Tesla, Inc.) are still not on par with Apple Inc. or NVIDIA Corporation. But this is a real customer that can bring tangible production."