Earnings Call Insights: Intel Corporation (INTC) Q4 2025
Management View
- CEO Lip-Bu Tan opened by highlighting that “2025 was a year of solid progress” and described Intel as a “more focus and execution driven company,” citing organizational simplification, new leadership, and a strengthened balance sheet. He emphasized that “the era of artificial intelligence is driving unprecedented demand for semiconductor across the entire compute landscapes” and stated, “The breadth of our IP and know-how…uniquely position us to capitalize on these AI-driven trends, capture sustainable profitable growth.”
- Tan reported that in the Client Computing Group, “we strengthened our position in both consumer and enterprise notebooks with our Core Ultra Series 3 lineup” and exceeded the commitment of delivering one SKU by delivering three. He added that Series 3 is expected to be “the most broadly adopted and globally available AIPC platform we have ever delivered.” He projected confidence, saying, “we are on the path of 45% market share and profitability in both notebooks and desktops over the next several years.”
- In the Data Center and AI (DCAI) segment, Tan centralized data center and AI businesses, focusing resources on the 16-channel Diamond Rapids, accelerating Coral Rapids, and reintroducing multi-threading. He noted collaboration with NVIDIA to build a custom Xeon integrated with NVLink technology. Tan highlighted that Intel’s ASIC business grew more than 50% in 2025, reaching an annualized revenue run rate greater than $1 billion in Q4.
- On Intel Foundry, Tan stated, “We are now shipping our first products built on Intel 18A” and that “Intel 14A development remains on track.” He observed that customer engagements on Intel 14A are active, with “customers will begin to make firm supplier decision starting in the second half of this year and extending into the first half of 2027.”
- CFO David Zinsner reported, “Fourth quarter revenue was $13.7 billion at the high end of the range we provided in October.” He added that “Non-GAAP gross margin came in at 37.9%…140 basis points ahead of guidance,” and “we delivered fourth quarter non-GAAP earnings per share of $0.15 versus our guidance of $0.08.” Zinsner noted, “Q4 marks the fifth consecutive quarter of revenue above our guidance even as we navigate industry-wide supply constraints.”
Outlook
- Zinsner provided Q1 2026 guidance of a revenue range between $11.7 billion and $12.7 billion, with a midpoint of $12.2 billion, and forecasted a gross margin of approximately 34.5% and breakeven EPS, all on a non-GAAP basis.
- He stated, “We expect Intel Foundry revenue up double digits quarter-over-quarter, helped by continued mix shift to EUV wafers and Intel 18A pricing.”
- For full year 2026, Zinsner commented, “we expect our factory network to improve available supply beginning in Q2 and for each of the remaining quarters in 2026,” and flagged that “rising component pricing is a dynamic we continue to watch closely, especially relative to the client market and could limit our revenue opportunity this year.”
- Operating expenses for 2026 are targeted at $16 billion, and capital expenditures are planned to be “flat to down slightly” with a heavier weighting in the first half.
Financial Results
- Zinsner stated, “Q4 operating cash flow was $4.3 billion with gross CapEx of $4 billion in the quarter and positive adjusted free cash flow of $2.2 billion.”
- Full year revenue was $52.9 billion, and full year non-GAAP EPS was $0.42.
- Intel Products Q4 revenue was $12.9 billion. CCG revenue was $8.2 billion. DCAI revenue was $4.7 billion.
- Operating profit for Intel Products was $3.5 billion, and Intel Foundry delivered revenue of $4.5 billion but posted an operating loss of $2.5 billion. External foundry revenue was $222 million.
Q&A
- Ross Seymore, Deutsche Bank: Asked about supply improvements and longer-term CapEx. Zinsner responded, “improving yields and throughput are a great driver of supply increases,” and “we are ramping up tool spending quite a bit in ’26 relative to ’25 to address this supply shortfall.”
- Seymore also inquired about gross margins. Zinsner explained, “when you look at Q1, the gross margin decline…there’s 2 main components. Obviously, revenue coming down with a largely fixed cost business…But the other piece…Panther Lake…is still dilutive to the corporate average.”
- Timothy Arcuri, UBS: Asked about unconstrained revenue guidance. Zinsner replied, “we’d be well above seasonal if we had all the revenue or supply…to hit the revenue.”
- Arcuri sought clarity on foundry success metrics. Tan replied, “in the second half of this year, they’re going to indicate to us what kind of capacity firm commitment…so that we can deploy the capacity CapEx.”
- Joseph Moore, Morgan Stanley: Asked about server roadmap timing. Tan said, “we are laser-focused in 16 channels Diamond Rapid and we simplify the product road map…accelerate the introduction of Coral Rapid.”
- Stacy Rasgon, Bernstein: Pressed on segment declines. Zinsner answered, “both will be down as a function of supply,” confirming the first quarter is the trough, with improvement expected in Q2.
- Vivek Arya, BofA Securities: Asked about foundry revenue timeline. Tan confirmed, “risk production in the later part of 2027 and real production, volume production in 2028.”
- Aaron Rakers, Wells Fargo: Inquired about memory constraints. Tan acknowledged, “industry facing a very big challenge is the memory constraint and also the pricing.”
- Rakers also asked about ASIC growth. Tan stated, “we are already in the run rate of $1 billion. It’s a robust demand and customers really excited about what we have.”
Sentiment Analysis
- Analysts frequently raised concerns about supply constraints, gross margin trajectory, and timing of foundry customer commitments, with a slightly negative to cautious tone, especially on near-term financial impacts.
- Management’s tone was confident regarding AI-driven growth and long-term foundry prospects, but acknowledged challenges, with Tan stating, “I’m disappointed that we are not able to fully meet the demand in our markets.”
- Compared to the previous quarter, analysts remained focused on supply and gross margin, but pressed more on specifics around foundry milestones and segment declines. Management’s language shifted to increased transparency and urgency on supply issues, while maintaining optimism about strategic progress.
Quarter-over-Quarter Comparison
- Guidance for Q1 2026 reflected a lower midpoint than Q4 2025, highlighting intensified supply constraints.
- Management’s narrative moved from emphasizing balance sheet strength and strategic partnerships in Q3 to focusing on execution, yield improvement, and client/data center supply in Q4.
- Analysts’ questions in both quarters centered on supply, gross margin, and foundry strategy, but Q4 saw greater scrutiny on execution and segment performance.
- Key metrics such as operating profit and foundry losses were explicitly updated, with CCG revenue and DCAI revenue both lower in Q4 compared to Q3.
- Management confidence in long-term foundry and AI-driven demand remained, but tone reflected more urgency in addressing execution gaps.
Risks and Concerns
- Management cited supply constraints as a major business risk, particularly acute in Q1 2026, impacting both client and data center segments.
- Rising component pricing, especially for memory, was flagged as a potential limiter of revenue opportunity.
- Foundry business remains in early stages, with customer commitments on Intel 14A not expected until late 2026 or early 2027.
- Analysts repeatedly questioned the pace of supply improvement, gross margin recovery, and segment declines.
Final Takeaway
Intel’s management emphasized progress in AI-driven product categories, reported stronger-than-guided financials, and signaled a clear path to capturing 45% market share in client devices and scaling foundry operations as customer decisions on Intel 14A approach. However, acute supply constraints and rising component costs are set to limit near-term growth, while execution on yield and foundry customer commitments remain critical priorities for 2026 and beyond.