Intel Corporation (INTC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: while Intel has strong revenue expectations and positive developments in AI and foundry services, margins are declining, and supply constraints are a concern. The Q&A reveals uncertainties, especially regarding supply and future guidance. The lack of clear guidance and ongoing challenges in meeting demand suggest a neutral impact on stock price, despite some positive long-term prospects. Without market cap data, a neutral prediction is prudent.
Key Financial Performance
Q4 Revenue $13.7 billion, at the high end of the range provided in October. Strong growth across all businesses, benefiting from AI infrastructure build-out with AIPC, traditional server, and networking revenue, all up double digits sequentially and year-over-year.
Non-GAAP Gross Margin 37.9%, approximately 140 basis points ahead of guidance. Driven by higher revenue and lower inventory reserves, partially offset by increased mix of outsourced client products and the early ramp of Intel 18A.
Non-GAAP EPS $0.15, versus guidance of $0.08. Driven by higher revenue, stronger gross margins, and continued spending discipline.
Q4 Operating Cash Flow $4.3 billion, with gross CapEx of $4 billion and positive adjusted free cash flow of $2.2 billion.
Full Year Revenue $52.9 billion, down slightly year-over-year due to constraints across manufacturing network and external suppliers, limiting growth especially in the second half.
Full Year Non-GAAP Gross Margin 36.7%, up 70 basis points on reduced period charges.
Full Year Non-GAAP EPS $0.42, up $0.55 year-over-year on lower period charges and improved operating leverage.
Full Year Operating Cash Flow $9.7 billion, with $17.7 billion of gross capital investments and adjusted free cash flow of minus $1.6 billion for the year.
CCG Revenue $8.2 billion, in line with expectations. AIPC units grew 16%.
DCAI Revenue $4.7 billion, up 15% sequentially, reflecting strong demand for traditional server compute. Revenue would have been higher with more supply.
Custom ASIC Business Growth Grew more than 50% in 2025, 26% sequentially, reaching an annualized revenue run rate greater than $1 billion in Q4.
Intel Foundry Revenue $4.5 billion, up 6.4% sequentially on increased EUV wafer mix.
External Foundry Revenue $222 million in Q4, driven by projects with the U.S. government and deconsolidation of Altera.
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Operating Highlights
Core Ultra Series 3: Intel launched the Core Ultra Series 3 lineup, formerly known as Panther Lake, ahead of schedule with three SKUs instead of one. It is built on the advanced Intel 18A manufacturing process and powers over 200 notebook designs. It offers up to 27 hours of battery life and a 70% improvement in graphics performance.
Nova Lake: Intel announced the next-generation Nova Lake, expected to launch at the end of 2026, as part of its client roadmap.
Granite Rapids, Sapphire Rapids, and Emerald Rapids: Intel is ramping up these products to meet strong demand for traditional servers, which play a critical role in AI-driven workloads.
Coral Rapids: Intel is accelerating the introduction of Coral Rapids and reintroducing multi-threading into its data center roadmap.
AI-driven computing: Intel is positioning itself to capture growth opportunities in AI across all its businesses, including client computing, data centers, and AI accelerators.
Hybrid AI: Intel is working with ecosystem partners to enable hybrid AI, splitting workloads between cloud and client for better performance and cost efficiency.
ASICs: Intel is focusing on purpose-built silicon for AI, networking, and cloud workloads, with its custom ASIC business growing more than 50% in 2025.
Intel 18A manufacturing process: Intel is shipping its first products built on the Intel 18A process, the most advanced semiconductor process developed in the U.S., and improving yields steadily.
Operational efficiency: Intel simplified its organization, reduced bureaucracy, and recruited new leadership to improve decision-making and execution.
Supply constraints: Intel faced supply constraints that limited its ability to meet demand but is working aggressively to address these issues.
Foundry business: Intel is building a world-class wafer and advanced packaging foundry, focusing on trust, consistency, and execution. It is engaging with customers for its Intel 14A process and advanced packaging solutions like EMIB.
AI and accelerated strategy: Intel is developing a broad AI and accelerated strategy, including integrating x86 CPUs with fixed-function and programmable accelerator IP to address emerging AI workloads.
Customer-centric reorganization: Intel reorganized its team to become more customer-centric and engineering-focused, aligning its data center and AI businesses for better coordination.
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Risk or Challenges
Supply Constraints: Intel faced significant supply constraints in 2025, which limited their ability to meet strong customer demand across key markets, including AI infrastructure and traditional servers. This issue is expected to persist into early 2026, impacting revenue and customer satisfaction.
Yield Challenges: Yields for Intel's advanced manufacturing processes, such as Intel 18A, are below desired levels. This is a critical area for improvement as it directly affects production efficiency and the ability to meet demand.
Rising Component Costs: The industry-wide increase in prices for key components like DRAM, NAND, and substrates could limit Intel's revenue opportunities, particularly in the client market.
Execution Risks: Intel's multiyear transformation plan and ambitious road map for AI-driven computing and advanced manufacturing carry significant execution risks. Any delays or missteps could adversely impact their strategic objectives.
Foundry Business Challenges: Building a world-class foundry business requires substantial time, effort, and resources. Intel is still in the early stages of this journey, and any delays or quality issues could hinder progress.
Customer Dependency: Intel's reliance on key customers for its data center and AI businesses poses a risk. Any changes in customer demand or relationships could significantly impact revenue.
Economic and Market Uncertainties: Economic uncertainties and intense competitive pressures in the semiconductor industry could affect Intel's ability to achieve its financial and strategic goals.
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Guidance & Outlook
Revenue Expectations: Intel forecasts Q1 2026 revenue in the range of $11.7 billion to $12.7 billion, with a midpoint of $12.2 billion. For the full year 2026, Intel expects factory network improvements to increase available supply starting in Q2, supporting growth in server markets and client CPU demand.
Margin Projections: Intel expects Q1 2026 gross margin to be approximately 34.5%, down sequentially due to lower revenue, increased 18A volumes, and product mix. Operating expenses for 2026 are targeted at $16 billion.
Capital Expenditures: Intel plans for 2026 capital expenditures to be flat to slightly down compared to 2025, with expenditures weighted towards the first half of the year. These investments are aimed at supporting demand in 2027 and beyond.
Market Trends and Business Segment Performance: Intel anticipates strong growth in the server market for 2026, driven by AI infrastructure demand. Client CPU inventory is lean, and there is excitement for the Series 3 product lineup. However, rising component pricing for DRAM, NAND, and substrates could limit revenue opportunities in the client market.
Strategic Plans and Product Launches: Intel plans to continue ramping its Core Ultra Series 3 (Panther Lake) and launch Nova Lake at the end of 2026. The company is also focusing on advancing its data center and AI strategies, including the introduction of Coral Rapids and collaboration with NVIDIA on custom Xeon processors. Intel aims to build a world-class wafer and advanced packaging foundry, with milestones achieved in Intel 18A and 14A processes.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Are the yield improvements and other actions sufficient to address seasonality in the short term?
A:Improving yields and throughput are key drivers of supply increases, with a good ROI as they don't require incremental capital. CapEx spending is being adjusted, with a focus on tools rather than space. Wafer start increases are being seen across Intel 7, Intel 3, and 18A, with improvements expected throughout the year.
Q:When will Intel decide to loosen CapEx reins for structurally higher demand?
A:Intel will only spend on 14A capacity after securing customers, with visibility expected in the back half of this year and the first half of next year. Spending will be unlocked once customer commitments are secured.
Q:What is the outlook for gross margins for the year?
A:Gross margins are expected to improve as supply and Panther Lake's cost structure improve. The focus is on driving product cost structures to improve margins, with a target to first reach 40% and then set a new target.
Q:What would the unconstrained guidance for March look like?
A:The unconstrained guidance would be well above seasonal levels if all demand could be met. The $12.2 billion guidance is at the low end of seasonal due to supply constraints.
Q:What defines success for Intel's foundry business?
A:Success is defined by building a world-class foundry business, securing customer commitments, and achieving advanced packaging revenue. Early indicators include customer prepayments and advanced packaging opportunities exceeding $1 billion.
Q:What are the server prospects and timeline for Copper Rapids?
A:Intel is focused on Diamond Rapids and accelerating Coral Rapids, which will reintroduce multi-threading. The team is laser-focused on delivering competitive products and meeting customer demand.
Q:Can Intel shift wafer mix towards data center from PC?
A:Yes, Intel is focusing on mid- and high-end client products and shifting excess supply to the data center to meet demand.
Q:What is the seasonality outlook for the year?
A:Intel expects to be better than seasonal through the year as supply improves, starting in the second quarter.
Q:Is the server momentum driven by hyperscalers or enterprise demand?
A:Hyperscalers are a key driver, with strong engagement and long-term commitments. Enterprise demand also contributes, but hyperscalers are prioritized.
Q:Why is data center revenue expected to be down in Q1 despite high demand?
A:Supply constraints are the main reason, with efforts to shift supply to data center while also supporting the client market. Inventory levels are low, making it a hand-to-mouth situation.
Q:When will Intel start seeing revenue from external foundry efforts?
A:Risk production for 14A is expected in late 2027, with volume production in 2028. Customer commitments are required before capacity expansion.
Q:What is the server CPU TAM in 2026 and Intel's supply outlook?
A:The demand is largely an x86 phenomenon, with Intel focusing on improving supply and accelerating product introductions like Coral Rapids to compete effectively.
Q:Why isn't Intel more aggressive in placing equipment orders for future demand?
A:Intel is focusing on improving yields and cycle times to increase supply without additional CapEx. Aggressive tool acquisition is happening for Intel 7, Intel 3, and 18A, but 14A capacity expansion is on hold until customer commitments are secured.
Q:What is the status of customer engagements for 14A?
A:Customers are engaging with PDK 0.5 and test chip designs. Commitments for volume production are expected in the second half of the year, with risk production in late 2027 and volume production in 2028.
Q:What is the impact of memory constraints on the PC market and gross margins?
A:Memory constraints are challenging, with larger players managing better than smaller ones. Intel is allocating resources to meet customer needs. Memory pricing impacts gross margins, but Lunar Lake demand is supported by early memory acquisition.
Q:What is the progression of Intel's custom ASIC business?
A:The custom ASIC business is robust, with a $1 billion run rate. Opportunities include AI, network, and cloud workloads, with advanced packaging as a key differentiator.
Q:Review of Unclear Management Responses
A:Management avoided providing a precise figure for unconstrained guidance, describing it as a 'squishy figure.' Additionally, they did not provide a clear timeline for when supply constraints would be fully resolved or specific details on the server CPU TAM in 2026.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Client
AI Host
AI business
AI computing
AI importance
AI networking
AI objective
AI opportunity
AI splitting
AI trend
AI workload
AIPC platform
AP note
ASICs XPUs
ASICs purpose
Coral Rapids
Core
EMIB
Lip Bu
Series
accelerator
center AI
customer demand
deployment AI
efficiency
infrastructure
journey
leader
momentum
notebook
opportunity AI
progress Intel
resource
road map
semiconductor
server road
world class
yield improvement
INTC Transcript
Intel Corporation (INTC) Q4 2025 Earnings Call Transcript
Unknown1-22
The earnings call presents a mixed picture: while Intel has strong revenue expectations and positive developments in AI and foundry services, margins are declining, and supply constraints are a concern. The Q&A reveals uncertainties, especially regarding supply and future guidance. The lack of clear guidance and ongoing challenges in meeting demand suggest a neutral impact on stock price, despite some positive long-term prospects. Without market cap data, a neutral prediction is prudent.
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