Intel earnings highlight server CPU strength, improve manufacturing visibility: analysts

Intel Corp (NASDAQ:INTC,

According to Wedbush, the quarter reinforced that computing demand, particularly for server CPUs, has become the dominant short- and medium-term growth narrative for Intel Corporation.

The company doubled its price target on the stock to $60, but maintained its ‘Neutral’ rating.

“While we don’t entirely agree with the latter view, Intel appears to be better positioned to address the unexpectedly strong growth in server CPU demand driven by inference and argent workloads,” they wrote.

The firm noted that management indicated that customer demand for server computing was unexpectedly strong and, in some cases, underserved, with demand described as outpacing supply. This strength is increasingly tied to AI inference workloads, which are placing greater requirements on data center infrastructure.

Wedbush also highlighted expectations for continued unit growth through 2026 and potentially into 2027, suggesting a longer-lasting demand cycle than previously assumed.

The analysts further noted improved execution on Intel’s manufacturing roadmap and noted that yields on process node 18A are progressing faster than anticipated.

They also pointed to comments on node 14A, where Intel indicated it is designing more future internal tiles in the process, a sign they interpreted as growing confidence in both technical progress and potential demand from external customers. ASIC revenue was another bright spot, growing more than 30% sequentially and a run rate approaching $1 billion, with additional upside suggested.

The firm also noted that PC demand may stabilize as customers rebuild inventories from historically low levels, although it still expects weakness in the broader PC market later this year. While Wedbush remained cautious on valuation, it said improving fundamentals in AI-powered computing support a more stable outlook than in previous quarters.

Jefferies also emphasized that AI tailwinds are reshaping demand dynamics in Intel’s server and accelerator businesses.

“Intel’s results were better, but more importantly it validates the AI ​​tailwinds driving significant server CPU and XPU demand,” they wrote, noting that expanding XPU usage is directly contributing to higher server processor requirements.

Jefferies highlighted double-digit growth in server units and said momentum is expected to extend into 2027, though he suggested competitors like AMD could be better positioned in certain high-end segments over time.

Jefferies also highlighted strength in Intel’s broader business segments, including strong performance in client computing and foundry operations, supported by improved margins driven by higher volumes and gains in manufacturing efficiency. AI PC adoption was highlighted as a growing driver within the customer segment, while foundry revenues benefited from increased adoption of advanced process technologies.

At the same time, the company signaled weakening conditions in the traditional PC market, and management signaled expectations for weaker demand in the second half of the year.

Both research notes framed Intel’s results as driven by higher-than-expected AI-related computing demand, particularly in server CPUs, along with incremental improvements in manufacturing execution.

While Wedbush maintained a more cautious valuation stance and Jefferies noted that competitive dynamics continue to change, both companies agreed that demand for AI-driven infrastructure is providing a more favorable near-term backdrop for the company than previously anticipated.