Intel’s AI chip buzz runs into a PC market drag

Intel heads into Thursday’s earnings report with one business running hot and another looking far less lively: AI-driven server chips are drawing intense demand, while the PC market is still giving analysts reasons to squint.

The chip maker, led by Chief Executive Lip-Bu Tan, is due to report June-quarter results after the market closes. Its stock has been one of 2026’s standout movers, up 186% for the year, according to MarketWatch, though the rally has cooled with shares down 25% from their June 22 closing high.

Wall Street’s focus is squarely on Intel’s central processing units, or CPUs, which are used in inference workloads tied to agentic AI. Analysts cited by MarketWatch say demand is strong enough to raise hopes for an earnings beat, though supply and pricing are the key swing factors.

FactSet’s analyst consensus calls for Intel’s data-center and AI segment, which includes server CPUs, to post June-quarter revenue of $5.4 billion. That would be a 37.8% increase from a year earlier.

Wedbush analyst Matt Bryson said higher average selling prices for CPUs are likely to drive that growth. Intel said on its previous earnings call that it had improved CPU output after being undersupplied earlier in the year, while also saying demand was still running ahead of supply.

PC chips are the softer spot

The server story is the flashiest part of Intel’s setup, but analysts are watching the company’s client-computing group for signs of strain. That unit includes PC CPUs, and FactSet expects second-quarter revenue of $8 billion, up just 1.7% from a year earlier.

Susquehanna analyst Christopher Rolland said in a client note that strong demand for server CPUs, combined with rising memory-chip prices, has weighed on PC production and shipments. He said Intel is directing limited front-end wafer supply toward server chips rather than PC chips.

Rolland also expects PC builds in the back half of the year to be much weaker than in prior years because of elevated memory costs. He forecast below-seasonal performance for Intel’s client-computing group during what is usually the strongest stretch for that market.

Bernstein analyst Stacy Rasgon said Intel’s client-computing outlook could disappoint investors. He added that the company may have room to soften that hit if it shows strength in server chips and gives encouraging updates on manufacturing progress.

Foundry updates are in the mix

Intel’s foundry business is another closely watched piece of the earnings story. On Tuesday, Intel said cybersecurity company Fortinet will use its foundry to design, package and manufacture security chips.

In June, Intel said its 18A-P variant node had entered risk production, a stage where the manufacturing process is tested across chip cores before broader production. MarketWatch also reported that Intel’s Embedded Multi-die Interconnect Bridge advanced-packaging technology has attracted interest from chip designers, with Google discussed as a potential customer for tensor processing units.

RBC Capital Markets analyst Srini Pajjuri said in a note that he expects positive foundry updates from Intel during the second half of the year, especially after the company announced in April that it would work with Elon Musk’s Terafab chip-making project.

Foundry spending may come with a cost. Rasgon said investments in that business could pressure Intel’s free cash flow and margins.

Intel guided for a second-quarter gross margin of 39%, down from the previous quarter. The company attributed the prior-quarter strength to one-time inventory benefits from selling partially compromised chips. FactSet still expects a sharp improvement from Intel’s 29.7% gross margin in the same period last year.

Across the company, FactSet’s consensus calls for June-quarter revenue of $14.4 billion and adjusted earnings of 22 cents a share.

This story draws on original reporting from MarketWatch.