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Intel Corporation’s (INTC) latest wave of layoffs in its Data Center and AI Group may look alarming at first glance, but long-term investors should focus on what the move says about CEO Lip-Bu Tan’s turnaround strategy rather than the headline itself. The company confirmed that it is reducing headcount within the business responsible for server processors and artificial intelligence (AI) chips as part of a broader effort to become a leaner, more efficient organization. Importantly, Intel emphasized that the restructuring will not affect its product roadmap or customer commitments, suggesting the layoffs are aimed at improving execution rather than scaling back its ambitions in one of its most critical growth markets.
The timing is noteworthy, coming just ahead of Intel’s quarterly earnings report. While workforce reductions often signal weakness, this case appears more consistent with management’s ongoing effort to simplify the organization, lower operating costs, and accelerate decision-making. The Data Center and AI Group remains a strategic asset for Intel, generating $5.1 billion in first-quarter revenue, demonstrating that demand for its server and AI products remains resilient despite fierce competition.
If the restructuring successfully boosts profitability without disrupting innovation or customer relationships, it could strengthen the company’s turnaround story.
About Intel Corporation Stock
Intel Corporation is a leading technology company specializing in the design, development, manufacture and marketing of semiconductor products, including microprocessors, chipsets, graphics processing units (GPUs), memory and related hardware for consumer, enterprise and industrial markets. Headquartered in Santa Clara, California, Intel remains a key player in data center, PC and emerging AI and networking segments. Intel’s market cap is $530 billion, reflecting its valuation among the world’s largest semiconductor companies.
Intel has been one of the semiconductor sector’s strongest performers over the past year as investors have cheered its turnaround strategy, the company’s expanding AI ambitions, and improving prospects for its foundry business. The stock has delivered solid triple-digit gains of 353.3% over the past 52 weeks and 185.5% year-to-date (YTD), significantly outperforming the broader market as confidence in Intel’s restructuring efforts has grown.
Momentum accelerated on July 21, when shares surged 8.64% ahead of the company’s quarterly earnings report, as investors rotated back into AI-related chipmakers following a sector-wide pullback. Notably, the announcement of a new round of layoffs in Intel’s Data Center Group did not weigh on investor sentiment. Instead, the market appeared to interpret the job cuts as another step in management’s broader restructuring plan to streamline operations, improve efficiency, and strengthen long-term profitability. However, it remains to be seen whether upcoming results can justify the stock’s sharp run-up.
The stock is currently trading at a premium to its sector median at 151.07 times forward earnings.
Q1 Results Exceeded Consensus Estimates
Intel’s first-quarter 2026 earnings were released on April 23. The company reported revenue of $13.58 billion, up 7% year-over-year (YOY), while non-GAAP earnings per share (EPS) reached $0.29 versus $0.13 in the prior-year period, representing a 123% YOY increase and exceeding expectations. On a non-GAAP basis, net income rose to $1.5 billion, up 156% YOY.
The most important feature of the quarter was the acceleration in Intel’s data center and AI business, which is increasingly defined by CPU demand tied to AI workloads. Segment revenue reached $5.1 billion, up 22% YOY, materially outpacing the rest of the portfolio and well ahead of expectations. This growth was driven primarily by server CPUs, particularly Xeon processors, as hyperscalers and enterprises scale infrastructure for inference and emerging agentic AI systems. Management explicitly framed CPUs as the “essential role” in the AI era, reflecting a shift from GPU-centric training workloads toward CPU-heavy orchestration, inference, and real-time processing.
This CPU-led demand is not merely cyclical but structural. Industry data indicates that AI server architectures are evolving toward significantly higher CPU-to-GPU ratios, which is materially increasing unit demand and pricing power for server-grade processors. As a result, Intel is actively prioritizing production capacity toward data center CPUs, underscoring the centrality of this segment to near-term growth.
Outside of the data center, performance was more mixed but still constructive. The Client Computing Group generated $7.7 billion in revenue, up about 1% YOY, while the foundry business experienced around 16% growth.
Furthermore, Intel’s guidance reinforced the improving trajectory. For Q2 2026, the company expects revenue of $13.8 billion to $14.8 billion and non-GAAP EPS of $0.20.
In addition, analysts predict EPS to be $0.65 for fiscal 2026, an improvement of 641.7% YOY, and to surge again by 58.5% annually to an EPS of $1.03 in fiscal 2027. Moreover, its EPS is expected to rise 138.5% in the about to be reported quarter (Q2) to $0.10. The company is set to report its Q2 2026 financial results on Thursday, July 23, after the market close.
What Do Analysts Expect for Intel Stock?
Most recently, KeyBanc raised its price target on Intel to $155 from $110 while reiterating an “Overweight” rating, citing robust demand for server CPUs fueled by agentic AI.
Also, Stifel raised its price target on Intel to $120 from $75 but maintained a “Hold” rating, while citing continued progress in the company’s multiyear turnaround.
INTC has a consensus “Moderate Buy” rating overall. Of the 45 analysts covering the stock, 11 advise a “Strong Buy,” one recommends a “Moderate Buy,” 31 analysts are on the sidelines, giving it a “Hold” rating, and two suggest a “Strong Sell.”
INTC’s average analyst price target of $108.68 indicates an upside of around 3.8%, while the Street-high target price of $200 suggests that the stock could rally 91.1%.
On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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