Don’t call it a comeback quite yet

Intel has some intel for its investors: This old dog can indeed learn new tricks.

The company just reported its Q2 results yesterday, and the quarter was so successful that it’s hard to pick which milestone to spotlight first:

• Revenue rose to $16.1 billion, a 25% jump and the company’s fastest revenue growth rate for any quarter since 2011.
• Intel’s pro-forma, or non-GAAP, gross margins came in at 40% for the first time in two years—a great sign for profitability.
• But the company’s spending more, too: Intel raised its 2026 capex guidance to over $20 billion, compared to its previous forecast of $18 billion.

Zoom out: The quarter caps off what’s been a huge come-up for Intel. The old tech stock suffered a brutal 60% decline in 2024 and had to suspend its dividend to raise cash. But over the past year, Intel has transformed from a washed-up relic of the past to a new AI darling, with shares climbing 307.95% in the last 12 months.

Intelling the future

Yet despite reporting green flag after green flag, shares of Intel still declined 7.89% today. Part of it is likely profit-taking—after all, the stock has risen 150.19% in 2026.

That isn’t the only factor, however: Investors are also laser-focused on that capex number. While AI companies are spinning a narrative about how greater hardware spending will lead to higher returns in the long run, shareholders aren’t so sure. Yesterday, traders punished Tesla and Alphabet for their own growing capex bills, and their fear is understandable: If growth for the companies that have propped up the entire market stops accelerating, it could spell disaster for everyone.

There’s also a lingering question about Intel’s business: Who are its customers? Intel’s miraculous AI transformation has hinged on the company becoming a foundry, which means that it makes its chips for other companies. But even while Intel’s business in Q2 was booming, it still hasn’t shown investors that it’s lined up any major clients worth writing home about.

“Since 2014 we have believed that success in foundry will require a cultural shift that we still have not seen,” explained Morgan Stanley analyst Joseph Moore in a note today, reiterating the firm’s equal-weight rating and raising his price target from $75 to $84.

Intel is learning the hard way that the only thing more difficult than winning the AI race is keeping its lead.—LB