Intel to report first quarter earnings as CPUs become key to AI growth

Intel (INTC) will report its first quarter earnings after the bell on Thursday, as AI continues to drive increasing demand for the company’s chips.

Intel missed out on the initial AI boom due to its lack of chips capable of running AI models as well as those from Nvidia (NVDA).

And while Nvidia took full advantage of its AI chip lead, transforming itself into a nearly $5 trillion company, Intel is finally on the cusp of grabbing its own piece of the AI bonanza.

That’s because as AI agents, semi or fully autonomous AI bots that can perform tasks on users’ behalf, continue to become more popular, central processing units (CPUs), like the ones Intel makes, are becoming increasingly important to data center companies and hyperscalers.

The reason? While AI models still largely run on GPUs or similar offerings from Amazon (AMZN) or Google (GOOG, GOOGL), the tasks that AI agents perform, such as browsing websites or searching for data in spreadsheets, rely on CPUs.

And that’s making the humble chip far more popular.

For Q1, Intel is expected to report earnings per share (EPS) of $0.01 on revenue of $12.36 billion, according to Bloomberg analyst consensus data. The company saw EPS of $0.13 and revenue of $12.67 billion in the same quarter last year.

The company’s Data Center and AI business is expected to generate revenue of $4.41 billion, up 6.8% year over year. During its fourth quarter earnings call, Intel noted it faced supply constraints on its chips due to high demand, but that it anticipates that to improve after Q1.

Intel is also contending with the fallout from the broader memory chip shortage, which is suppressing PC sales.

According to the International Data Corporation, the global PC market will decline 11.3% in 2026, though revenue is expected to grow 1.6% due to higher average selling prices.

The company expects its Client Computing revenue, which includes sales of chips for PCs, to top out at $7.1 billion in the quarter, down roughly 7% year-over-year.

Intel scored some major deals in Q1, though. It announced that it will work with Elon Musk on his planned Terafab facility, which will produce chips for SpaceX (SPAX.PVT), xAI, and Tesla (TSLA).

It also said it is entering into a multiyear arrangement with Google that will see its Xeon CPUs power AI, inference, and other workloads for Google Cloud.

Separately, Intel announced that it will repurchase a 49% stake in the fabrication facility it sold to Apollo for $11.2 billion in 2024 for $14.2 billion, the company said in a statement.

(Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)