Intel Earnings Reveal Whether the Chip Selloff Created a Buy

Summary

The importance of an earnings report has become almost overstated. However, it’s hard to understate what Intel Corporation NASDAQ: INTC faced heading into its Q2 2026 earnings report. The PHLX Semiconductor Index had fallen roughly 19% from its June 22 peak. Every constituent was in the red. Nearly $2 trillion in sector value had been erased. Intel Today$96.23 -4.00 (-3.99%) As of 01:27 PM Eastern This is a fair market value price provided by Massive. Learn more.52-Week Range$18.97▼$142.35Price Target$105.30 The sell-off happened because investors questioned whether AI infrastructure spending can justify the current multiples being assigned to chip stocks. Investors needed Intel's results to answer one question: Is this a healthy reset, or early proof that demand is cracking? The headline numbers from the report were encouraging. Revenue hit $16.1 billion, up 25% year-over-year, roughly $1.8 billion above the midpoint of guidance. It was also Intel's fastest growth rate since 2011. Adjusted earnings per share (EPS) of 42 cents doubled the 21 cents analysts expected. Gross margin expanded to 41.8%, nearly 280 basis points above management's own guide. The stock jumped as much as 12-13% after hours, briefly touching levels above $112. For a sector trading on fear all month, the earnings report seems to demand a repricing. But the details underneath still leave room for caution. Data Center Demand Looks Real, Not a Rebound StoryThe clearest signal was in the company’s Data Center and AI Group segment. Revenue jumped 59% year-over-year to $6.3 billion. Management said AI-linked businesses grew more than 70% year-over-year and now make up roughly 70% of total revenue. Chief financial officer (CFO) David Zinsner told analysts that server CPU demand has improved since last quarter. He pointed to double-digit industry unit growth through 2028. Intel also disclosed 10 long-term supply agreements with customers. Some customers want to lock in pricing. Others are focusing pure...