Intel Earnings Preview: Can AI CPU Momentum Offset Margin Pr…
Core Financial Indicators
Revenue is expected to come in slightly above the midpoint of Intel’s own guidance. In January, the company guided for first quarter revenue of $11.7 billion to $12.7 billion. The current analyst consensus of about $12.4 billion therefore assumes Intel can land modestly above the midpoint, helped by better server demand and a steadier enterprise backdrop than management implied three months ago.
Gross margin is the more important swing factor. Intel guided to 34.5% non GAAP gross margin for Q1, down sharply from the 39.2% it delivered in the same quarter last year and also below the 37.9% it posted in Q4 2025. That is the clearest sign that mix, utilization, and supply constraints are still pressuring the model even as enthusiasm around AI related CPU demand has improved.
Earnings are expected to be extremely thin. The Street’s normalized EPS estimate is effectively breakeven at $0.009 to $0.00, while Intel itself guided to $0.00 of non GAAP EPS. By comparison, Intel generated $580 million of non GAAP net income and $0.13 of non GAAP EPS in Q1 2025. That means Intel does not need a huge beat to clear the bar, but it does need to show that the margin trough is temporary rather than structural.
Can Xeon convert AI enthusiasm into reported numbers?
The question for this quarter is whether that narrative shows up clearly enough in Intel’s reported mix and commentary. In Q4 2025, Data Center and AI revenue was $4.7 billion, up 9% year over year, while Client Computing revenue was $8.2 billion, down 7%. If management can show that server demand stayed firm into Q1 and that AI inference is lifting Xeon volumes or pricing, investors will likely give Intel more credit for a CPU led AI recovery.
Is 18A becoming a real foundry asset?
Foundry remains the hardest part of the Intel story to underwrite, but recent developments have improved the setup. On April 1, Intel announced it would repurchase Apollo managed funds’ 49% equity interest in the Fab 34 joint venture in Ireland. Apollo had originally invested $11.2 billion in 2024. Reuters reported the buyback is priced at $14.2 billion and financed with cash plus roughly $6.5 billion of new debt. Fab 34 makes Core Ultra and Xeon products on Intel 4 and Intel 3, so regaining full economics there is a meaningful confidence signal.
Even more important, Reuters reported in early March that CEO is reconsidering whether 18A should be offered to external customers after previously leaning toward keeping it mostly for internal products. CFO said Intel had made real progress on the node, although Reuters also noted that yields had been a concern and weak yields can pressure margins. If management sounds more confident on external customer interest, yields, and the path from 18A to 14A, the foundry thesis will look more credible.
Can the margins support the stock after the rerating?
This may be the single biggest issue of the quarter. The stock closed at $68.50 on April 17, while MarketScreener showed a 47 analyst average target price of $52.26, implying the shares are already trading well above the mean target. The stock has rerated much faster than the income statement has improved.
That valuation backdrop leaves little room for an uneventful print. Seeking Alpha’s earnings page showed six upward and twenty four downward normalized EPS revisions over the past 90 days, which suggests analysts have become somewhat more cautious into the report even as the stock has rallied. Intel can probably survive an in line quarter if the second half margin story improves, but a weak margin print plus vague commentary on foundry or CPU demand would make the stock harder to defend at current levels.
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Intel can probably clear the revenue bar, because expectations are not especially demanding and AI related CPU sentiment has improved meaningfully in recent weeks.
The harder test is whether management can convince investors that the margin trough is temporary, 18A is becoming more commercially relevant, and the recent rerating is justified by fundamentals rather than just a better narrative.
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