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# Intel Q3 Preview: Server CPUs, Foundry Customers and a 42% Margin Guide
- URL: https://www.thealphaagentic.com/intel-q3-2026-earnings-preview/
- Published: 2026-10-28T22:00:00.000Z
- Updated: 2026-10-29T05:18:33.000Z
- Description: Intel says AI inference and agentic workloads are lifting server CPU demand faster than it can build chips. Thursday's report tests its guide, its 18A and 14A progress, and a capex plan backed partly by a $23 billion share sale.
- Author: Eli Yang
- Tags: News, AI, Chips & Semis, Deals & Earnings, Intel (INTC), #pair-intel-q3-2026-earnings-preview

Intel (NASDAQ: INTC) says its problem is supply, not demand. "Strong demand for our products continues to outpace our growing supply," CEO Lip-Bu Tan said in July's [prepared remarks](https://d1io3yog0oux5.cloudfront.net/%5F55d7c77db61d0836bb9bcea650fc712a/intel/db/887/9266/prepared%5Fremarks/Q2+2026+Prepared+Remarks.pdf?ref=thealphaagentic.com). Intel [reports third-quarter results](https://www.intc.com/news-events/press-releases/detail/1782/intel-to-report-third-quarter-2026-financial-results?ref=thealphaagentic.com) "promptly after close of market" on Thursday, Oct. 29, with a call at 2 p.m. PT, or 5 p.m. ET. The report tests three things: whether Intel can ship enough server CPUs, whether its foundry is winning outside customers, and how it pays for a bigger capex plan.

> Key numbers
> 
> **Q3 2026 revenue guide:** $15.8 billion to $16.8 billion; the $16.3 billion midpoint is about 1% above Q2 2026 and about 19% above Q3 2025.
> 
> **Q2 2026 revenue:** $16.1 billion, up 25% from Q2 2025 and $1.8 billion above the midpoint of Intel's guide.
> 
> **Non-GAAP gross margin:** 42.0% guided for Q3 2026, against 41.8% in Q2 2026 and 40.0% in Q3 2025.
> 
> **Non-GAAP EPS:** $0.38 guided for Q3 2026, against $0.42 in Q2 2026 and $0.23 in Q3 2025.
> 
> **DCAI revenue:** $6.3 billion in Q2 2026, up 59% from Q2 2025.
> 
> **August share sale:** 242.1 million new shares, about 4.8% of the 5,043 million outstanding on June 27, 2026.

## The Guide

Intel guided third-quarter 2026 revenue to $15.8 billion to $16.8 billion, and at the $16.3 billion midpoint it expects a 42.0% non-GAAP gross margin and non-GAAP EPS of $0.38.

Intel's [second-quarter release](https://www.intc.com/news-events/press-releases/detail/1776/intel-reports-second-quarter-2026-financial-results?ref=thealphaagentic.com) set that bar. By our math, the midpoint is about 1% above the second quarter's $16.1 billion and about 19% above the $13.7 billion Intel reported in the third quarter of 2025, the year-ago quarter, when its non-GAAP gross margin was 40.0% and non-GAAP EPS was $0.23\. We are not citing analyst consensus.

| INTC                     | Q2 2025 | Year ago(Q3 2025) | Q4 2025 | Q1 2026 | Last quarter(Q2 2026) | Company guide(Q3 2026) |
| ------------------------ | ------- | ----------------- | ------- | ------- | --------------------- | ---------------------- |
| Revenue, $ millions      | 12,859  | 13,653            | 13,674  | 13,577  | 16,128                | 15,800–16,800          |
| DCAI revenue, $ millions | 3,939   | 4,117             | 4,737   | 5,052   | 6,262                 | Not guided             |
| Non-GAAP gross margin, % | 29.7    | 40.0              | 37.9    | 41.0    | 41.8                  | 42.0                   |
| Non-GAAP EPS, $          | (0.10)  | 0.23              | 0.15    | 0.29    | 0.42                  | 0.38                   |
| GAAP EPS, $              | (0.67)  | 0.90              | (0.12)  | (0.73)  | (2.16)                | 0.31                   |

*Source: Intel [Q3 2025](https://www.sec.gov/Archives/edgar/data/50863/000005086325000169/q325earningsrelease.htm?ref=thealphaagentic.com), [Q4 2025](https://www.sec.gov/Archives/edgar/data/50863/000005086326000009/q425earningsrelease.htm?ref=thealphaagentic.com), [Q1 2026](https://www.sec.gov/Archives/edgar/data/50863/000005086326000077/q126earningsrelease.htm?ref=thealphaagentic.com) and [Q2 2026](https://www.sec.gov/Archives/edgar/data/50863/000005086326000155/q226earningsrelease.htm?ref=thealphaagentic.com) earnings releases; June 2025 figures are the prior-year column of the Q2 2026 release. Margin and EPS guidance assume the $16.3 billion revenue midpoint. Intel sold a majority of Altera in the third quarter of 2025\. DCAI is Data Center and AI.*

**Last quarter's beat:** Second-quarter revenue was $1.8 billion above the midpoint of Intel's guide, and its non-GAAP gross margin beat guidance by about 280 basis points. Non-GAAP EPS of $0.42 compared with a $0.20 guide. GAAP EPS of $(2.16) included a $12.5 billion mark-to-market loss on Escrowed Shares.

**Growth:** Second-quarter revenue rose 25% from a year earlier, which Tan called Intel's "strongest revenue growth in more than fifteen years." Intel has beaten the midpoint of its own revenue and gross margin guidance in each of the last four quarters.

![Charts of Intel's quarterly revenue and gross margin guidance vs. reported results since Q3 2025](https://storage.ghost.io/c/b0/f1/b0f115e2-04db-4451-bca9-8288bfdeb3a5/content/images/2026/10/intel-q3-2026-earnings-preview-guidance-v2.png)

Intel beat the midpoint of its own revenue and non-GAAP gross margin guidance in each of the last four quarters. As of Oct. 26, 2026\. Source: Intel earnings releases. Chart: Alpha Agentic

**Share count:** The guide was issued before Intel sold 242.1 million new shares in August, per its [Aug. 12 8-K](https://www.sec.gov/Archives/edgar/data/50863/000119312526346806/d117670d8k.htm?ref=thealphaagentic.com). That is about 4.8% of the 5,043 million shares outstanding on June 27, by our math. The sale was set to close Aug. 12, so only part of it lands in the third-quarter average share count.

## Server CPUs: Demand Ahead of Supply

Intel's Data Center and AI (DCAI) revenue rose 59% from a year earlier to $6.3 billion in the second quarter of 2026, and Intel says supply, not demand, is limiting server shipments.

**Data center:** CFO Dave Zinsner said the gain came from "strong demand across hyperscale and enterprise." Tan said year-over-year server growth "was the strongest on record." Hyperscaler spending plans are tracked in our [Hyperscaler Capex Tracker](https://www.thealphaagentic.com/hyperscaler-capex-tracker/).

**Why CPUs:** Tan tied the demand to AI moving "from training to inference; and increasingly to agentic and multi-agent systems," which he said is raising general-purpose server CPU density. Zinsner said Intel forecasts "strong double-digit unit growth" in server CPUs for the industry this year and next.

**New products:** In an [Oct. 12 release](https://www.intc.com/news-events/press-releases/detail/1783/intel-accelerates-open-infrastructure-for-the-agentic-ai-era?ref=thealphaagentic.com), Intel said customer sampling is underway for its GPU D-series, an air-cooled inference card formerly code-named Crescent Island with up to 480 GB of memory in partner designs. It also showed Xeon 6+ rack designs that scale beyond 46,000 cores per rack. Intel disclosed no customers or revenue timing.

**Oracle:** On Oct. 27, Intel and Oracle (NYSE: ORCL) [announced plans](https://www.intc.com/news-events/press-releases/detail/1785?ref=thealphaagentic.com) for a multiyear collaboration to expand Xeon-based computing on Oracle Cloud Infrastructure, including planned offerings based on Diamond Rapids, Intel's next-generation server processor. The companies said they intend to coordinate roadmaps and processor capacity planning. They gave no financial terms or volumes.

**Supply:** Zinsner said supply "remains very tight" and that supply growth "is more skewed towards the end of Q3 and into Q4, especially for servers." Tan said the industry faces "one of the most severe supply constraints in its history" across leading-edge wafers, memory and substrates. That makes third-quarter server shipments, not demand, the number to watch.

**PCs:** Zinsner expects PC consumption to be "down low double digits percent for all of 2026," citing rising memory prices and constraints. Client Computing and Physical AI Group revenue was $8.9 billion in the second quarter.

## Foundry: 18A Output, 14A Commitment

Intel Foundry had revenue of $5.8 billion in the second quarter of 2026, only $293 million of it from outside customers, and the segment lost $2.1 billion.

**18A:** Zinsner said 18A output ran about 25% above target and rose more than 50% from the first quarter, and that third-quarter-to-date 18A yields were "trending ahead of targets set in March." Most foundry revenue comes from Intel's own products.

**14A:** Tan said Intel decided in the second quarter "to fully commit to high volume ramps in 2028," with risk production for internal products in the second half of 2027, and that PDK 0.9 was "on track for October." The [10-Q](https://www.sec.gov/Archives/edgar/data/50863/000005086326000157/intc-20260627.htm?ref=thealphaagentic.com) says the scale and pace of expansion "will ultimately be dictated by the amount of committed demand for Intel 14A" from its own roadmap and external customers.

**Packaging:** Tan said Intel has "a growing EMIB-T backlog" and aims to support customer ramps in 2027.

## Capex and Funding

Intel raised its 2026 capex outlook to "more than $20 billion" in July, and in August it sold stock with gross proceeds of about $23 billion, by our math, which it said may fund "capital expenditures and working capital."

**Capex:** Zinsner said 2027 capex would be "significantly above the 2026 levels," and that Intel is "aggressively locking in tool purchase orders" and "accelerating our clean room buildouts." Those orders matter for toolmakers such as KLA (NASDAQ: KLAC), which scheduled its results for after the market close on Oct. 28, and Lam Research (NASDAQ: LRCX), which [flagged supply limits](https://www.thealphaagentic.com/daily-brief-2026-10-22/) on Oct. 21.

**Ireland buyback:** On April 8, Intel bought back the 49% stake in its Ireland fab venture held by Apollo Global Management (NYSE: APO) for $14.2 billion, per the 10-Q. It paid with cash, short-term investments and a $6.5 billion term loan, which it refinanced with $6.5 billion of senior notes in the second quarter.

**Share sale:** Intel sold $20 billion of stock at $95 a share, per its [pricing release](https://www.sec.gov/Archives/edgar/data/50863/000119312526346806/d117670dex992.htm?ref=thealphaagentic.com). Underwriters then bought another 31.6 million shares, which lifted gross proceeds to the roughly $23 billion total.

**Cash flow:** Adjusted free cash flow was negative $8.4 billion in the second quarter. Intel's measure includes net partner flows at its fab ventures, which were negative $12.2 billion in the quarter, the period of the Apollo payment. Excluding those flows, it would have been about $3.8 billion positive, by our math.

Intel shares closed at $95.53 on Oct. 28, above the $95 August offering price.

## The Alpha Take

For Intel's Oct. 29 report, supply matters more than demand: the revenue midpoint is only about 1% above the second quarter, and Intel expects server output to be weighted to late in the quarter.

Its record of beating guidance means the midpoint is a low bar; the fourth-quarter guide and supply commentary matter more. If DCAI grows again and gross margin holds near 42%, that supports Intel's claim that inference is lifting CPU demand. Named 14A customers or a higher capex plan would give toolmakers more visibility. Without them, Intel is spending ahead of committed foundry demand, funded in part by new equity.

## What to Watch

Intel will report third-quarter 2026 results promptly after the market closes on Thursday, Oct. 29, before its 5 p.m. ET call; these are the benchmarks to measure them against.

**Revenue and margin:** Against $15.8 billion to $16.8 billion and a 42.0% non-GAAP gross margin, and against $13.7 billion and 40.0% in the third quarter of 2025.

**DCAI:** Growth after the second quarter's 59%, and whether server supply improved late in the quarter.

**Fourth-quarter guide:** Whether supply lets Intel guide higher, and any update on PC demand.

**18A and 14A:** Yields, PDK 0.9 delivery, and any named external 14A customer.

**External foundry revenue:** The second quarter's was $293 million.

**Inference products:** Any customer or timing detail on the GPU D-series, and any volume or timing for Diamond Rapids at Oracle.

**Capex:** Any 2026 figure above "more than $20 billion," and a first 2027 number.

**Share count and cash:** Diluted shares after the August sale, and adjusted free cash flow without the Ireland payment.

**Read-across:** Advanced Micro Devices (NASDAQ: AMD) [reports Nov. 3](https://newsroom.amd.com/news/earnings-date-3q-2026/?ref=thealphaagentic.com) after the close, so Intel's server commentary sets up AMD's. Intel's wafer and substrate comments also bear on capacity at TSMC (NYSE: TSM), covered in our [TSMC results story](https://www.thealphaagentic.com/tsmc-q3-2026-results/).