Intel Corp Earnings - Q4 2025 Analysis & Highlights
Intel's Q4 2025 earnings call highlighted strong financial performance, exceeding guidance in revenue, gross margin, and EPS, despite supply constraints. The company emphasized its strategic focus on AI-driven growth opportunities, strengthening its client franchise, advancing data center and AI accelerator strategies, and building a trusted US Foundry. Intel 18A and 14A process developments are progressing, with customer engagements for 14A expected to lead to firm supplier decisions in late 2026 and early 2027. Q1 2026 guidance anticipates a seasonal decline in revenue due to supply limitations, particularly impacting the Client Computing Group (CCG), while Intel Foundry revenue is expected to grow.
Key Financial Results
Fourth quarter revenue was $13.7 billion, at the high end of guidance.
Non-GAAP gross margin was 37.9%, approximately 140 basis points ahead of guidance.
Fourth quarter non-GAAP earnings per share was $0.15, exceeding guidance of $0.08.
Q4 operating cash flow was $4.3 billion, with gross CapEx of $4 billion.
Adjusted free cash flow was $2.2 billion in Q4.
Full year revenue was $52.9 billion, down slightly year-over-year.
Full year non-GAAP gross margin was 36.7%, up 70 basis points.
Full year non-GAAP EPS was $0.42, up $0.55 year-over-year.
Non-GAAP OpEx for the full year was $16.5 billion, down 15% versus 2024.
Full year cash from operations was $9.7 billion.
Gross capital investments for the full year were $17.7 billion, with capital offsets of approximately $6.5 billion.
Adjusted free cash flow for 2025 was minus $1.6 billion, but $3.1 billion in the second half.
The company exited 2025 with $37.4 billion of cash and short-term investments.
Business Segment Results
Intel Products' Q4 revenue was $12.9 billion, up 2% sequentially.
CCG revenue was $8.2 billion, down 4% quarter-over-quarter, but AI PC units grew 16%.
DCAI revenue was $4.7 billion, up 15% sequentially, the fastest sequential growth this decade.
Intel Foundry revenue was $4.5 billion, up 6.4% sequentially, driven by increased EUV wafer mix.
EUV wafer revenue grew from less than 1% of wafers out in 2023 to greater than 10% in 2025.
External foundry revenue was $222 million in the quarter, driven by US government projects and the deconsolidation of Altera.
Intel Foundry operating loss in Q4 was $2.5 billion, an $188 million worse quarter-over-quarter, due to the early ramp of Intel 18A.
All Other revenue was $574 million, down 42% sequentially due to the Q3 2025 deconsolidation of Altera.
The All Other category delivered an operating loss of $8 million.
Capital Allocation
NVIDIA's $5 billion investment closed in Q4.
The company repaid $3.7 billion of debt.
Capital expenditures for 2026 are planned to be flat to down slightly, with expenditures weighted to the first half.
The company expects to generate positive adjusted free cash flow for the full year 2026.
Plans to retire all $2.5 billion of maturities as they come due in 2026.
Industry Trends and Dynamics
The era of artificial intelligence is driving unprecedented demand for semiconductors across the entire compute landscape.
Rapid deployment of AI workloads will require heterogeneous silicon solutions, leveraging CPU, embedded NPUs, discrete and integrated GPU, ASICs, and XPUs.
Innovations in the software stack and emerging technologies like photonics, memory interfaces, interconnect, and quantum are needed.
The deployment of AI is amplifying the importance of x86 from orchestration and control planes to inference, edge workloads, and agentic AI.
The surge in AI workloads is driving massive demand for data centers, with cloud capacity alone unable to meet the scale of inference needed.
This is accelerating the push toward hybrid AI, splitting workloads between cloud and client.
The continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure.
The CPU's central function in coordinating traffic will drive traditional server refresh and new demand that grows the installed base.
The client consumption TAM was greater than 290 million units in 2025, marking two straight years of growth.
Industry-wide supply for key components like DRAM, NAND, and substrates has come under increasing pressure due to intense demand for AI infrastructure.
Rising component pricing could limit revenue opportunity in 2026, especially in the client market.
The server market is expected to have a strong year of growth for DCAI in 2026.
Competitive Landscape
Intel's breadth of IP and know-how across silicon design, system level integration, wafer manufacturing, and advanced packaging uniquely positions it to capitalize on AI-driven trends.
Core Ultra Series 3 will be the most broadly adopted and globally available AI PC platform delivered by Intel.
Intel is working closely with NVIDIA to build a custom Xeon fully-integrated with their NVLink technology for AI host nodes.
Intel Foundry is the only semiconductor manufacturer shipping gate-all-around transistors with backside power for revenue.
Intel's advanced packaging with EMIB and EMIB-T offers strong differentiation.
Performance reviews for Series 3 have been extremely favorable, with up to 27 hours of battery life, a 70% gen-on-gen improvement in graphics, and 50% to 100% better performance than peers on industry standard benchmarks.
Growth Opportunities and Strategies
Strengthening the client franchise, advancing data center, AI accelerator, and ASICs strategies, and continuing to build a trusted US Foundry.
Simplifying the server roadmap, focusing resources on the 16-channel Diamond Rapids and accelerating the introduction of Coral Rapids.
Coral Rapids will reintroduce multi-threading back into the data center roadmap.
Developing an AI and accelerator strategy including innovative options to integrate x86 CPU with fixed function and programmable accelerator IP.
Focusing on emerging AI workloads, reasoning models, agentic and physical AI, and inference at scale.
Rebuilding Intel as a compute platform of choice for the next era of AI-driven computing.
Building momentum in ASICs for purpose-built silicon for AI, networking, and cloud workloads.
ASIC team has a solid base to pursue a $100 billion TAM opportunity.
Intel 14A development remains on track, with steps taken to simplify the process flow and improve performance and yield.
Developing a comprehensive IP portfolio on Intel 14A and improving design enablement.
PDKs are now viewed by customers as industry standard.
Engagements with potential external customers on Intel 14A are active, with firm supplier decisions expected in late 2026 and early 2027.
Focusing on improving quality and yield in advanced packaging to support customer ramps beginning in second half of 2026.
Financial Guidance and Outlook
Q1 2026 revenue range is forecast at $11.7 billion to $12.7 billion, with a midpoint of $12.2 billion.
Q1 revenue reflects a lower end of seasonal Q1 due to internal supply constraints.
CCG is forecast to have a more pronounced revenue decline than DCAI in Q1, as internal supply is prioritized for server end markets.
Intel Foundry revenue is expected to be up double-digits quarter-over-quarter in Q1, helped by continued mix shift to EUV wafers and Intel 18A pricing.
Q1 gross margin is forecast at approximately 34.5% on a non-GAAP basis.
Q1 tax rate is forecast at 11% and breakeven EPS on a non-GAAP basis.
Gross margin is down sequentially due to lower revenue, increased 18A volumes, and product mix.
Factory network is expected to improve available supply beginning in Q2 2026 and for each remaining quarter.
Client CPU inventory is lean, and there is excitement for Series 3.
2026 operating expenses are targeted at $16 billion.
Non-controlling interest (NCI) is expected to net to approximately $325 million in Q1 and $1.2 billion for the year on a GAAP basis.
NCI is expected to grow meaningfully again in fiscal 2027.
Share count is forecast to be 5.1 billion shares in Q1 and grow in line with stock-based compensation.
