Lip-Bu Avoids Negative Reaction Amidst Intel’s Disappointing Q2 2025 EPS and Surprising Revenue Figures

This article does not constitute investment advice, and the author does not hold any positions in the stocks mentioned.

For the second quarter of this year, Intel experienced a similar demand surge as in the previous quarter. Many clients opted to preemptively adjust their orders in anticipation of potential sector-specific tariffs affecting the semiconductor industry. Nevertheless, despite this boost, Intel is projected to face a substantial year-over-year revenue decline.

Intel (INTC) Earnings Overview for Q2 2025

For the three-month period ending June 30, Intel reported a notable non-GAAP revenue of $12.859 billion, surpassing the consensus expectation of $11.87 billion. This positive surprise reflects the company’s resilience amidst challenging market conditions.

Analyzing revenue sources for the quarter, Intel’s breakdown included:

Client Computing Group (CCG): $7.871 billion
Data Center and AI (DCAI): $3.939 billion
Intel Foundry: $4.417 billion
Other Segment: $1.053 billion

The total product revenue reached $11.81 billion, with the foundry segment contributing a significant $4.417 billion. It’s worth noting that the ‘other’ revenue category for the previous year included earnings from Intel’s Network and Edge segment, which has since been discontinued.

Despite these strong revenue figures, Intel’s non-GAAP gross margin for the quarter was reported at 29.7 percent, falling short of its guidance of 36.5 percent. Additionally, the company reported a non-GAAP earnings per share (EPS) of -$0.10, which missed the consensus estimate of $0.01.

Q3 2025 Outlook

Looking forward, Intel’s guidance for the third quarter indicates projected revenues of approximately $13.1 billion, a sequential increase of 1.87 percent. This aligns with the company’s efforts to navigate the current economic landscape and capitalize on evolving market demands.

Intel Q3 2025 business outlook with GAAP and non-GAAP estimates for revenue and margins. — Intel’s Guidance for Q3 2025

In a significant operational shift, recent reports indicate that Intel plans to reduce its workforce from 99, 500 to 75, 000 by the end of the year, aiming for greater efficiency.

The market has reacted favorably to Intel’s latest earnings release, showing an approximate 3 percent increase in after-hours trading, signaling investor optimism amidst a challenging environment.

Analysts are particularly keen to hear insights during the upcoming earnings call regarding Intel’s strategy for prioritizing next-generation technology. The focus is on the potential transition to the 14A process over the current 18A process, which could align with TSMC’s cutting-edge 2nm technology. According to a Reuters report, such a strategic shift may soon be underway.

INTEL CEO LIP-BU TAN FACES GROWING INVESTOR PRESSURE AHEAD OF EARNINGS, WITH WALL STREET DEMANDING A CREDIBLE PATH TO PROFITABILITY—NOT JUST COST-CUTTING—AS THE COMPANY LAGS BEHIND RIVALS LIKE NVIDIA AND AMD.

— First Squawk (@FirstSquawk) July 24, 2025

Transitioning to a focus on the 14A process could require Intel to incur substantial write-offs associated with the 18A process, potentially amounting to billions in losses. Nevertheless, the pressure remains on CEO Lip-Bu Tan to forge a viable path towards sustainable profitability.

Moreover, as recently highlighted, KeyBanc analysts have noted that yields on Intel’s 18A process have improved to 55 percent, closing the gap with TSMC’s performance on its bespoke 2nm process.

However, Intel’s new CEO now faces a pivotal challenge: while TSMC remains the most effective fabrication partner for Intel’s product division, any exit from its foundry arrangement could lead to orphaning billions in fixed costs. Such costs cannot be mitigated without substantial volume orders from its own products division.

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