Intel reported third-quarter revenue of $16.5 billion, up 21% year over year, as data center demand surged and its PC business fell 5%, with Intel citing industry-wide memory shortages affecting the total addressable market. Higher DRAM and NAND prices are pushing system costs up and hurting demand.
The Data Center and AI group delivered $7.3 billion in revenue, up 78% year over year, with segment operating income of $3.0 billion and a 41.5% margin. Chief financial officer David Zinsner called it Intel's strongest data center revenue growth in 15 years, with demand strong across hyperscale, enterprise and neo cloud customers. "Purpose Built Silicon" revenue more than doubled year over year.
The market has shifted towards AMD's 192-core Turin processors, which Intel does not have a direct competitor for, but partners told ServeTheHome that Xeon 6 is selling because essentially everything is selling. Intel chief executive Lip-Bu Tan said the company's immediate priority is unlocking additional supply to meet extraordinary demand for the Xeon family, noting that substrate availability is limiting output and would take some time to ease.
The client side looked different. Revenue for the Client Computing and Physical AI Group fell 5% year over year to $8.1 billion. Intel cited industry-wide memory shortages affecting the total addressable market. Higher DRAM and NAND prices are pushing system costs up and hurting demand. Intel expects the PC slowdown to continue at least through the first half of next year, with memory and NAND pricing pressure expected to persist into 2027.
Intel Foundry posted $6.7 billion in revenue, up 58% year over year, though that figure includes intersegment transactions rather than external customer sales alone. The segment recorded an operating loss of $1.9 billion, narrower than the $2.3 billion loss a year earlier, with improved yields and cycle times reducing wafer costs. Intel released the Intel 14A 0.9 process design kit in October as committed, and expansion continues across sites including Ohio.
The company's non-GAAP gross margin reached 44.1%, and non-GAAP earnings per share came in at $0.52.
Intel's strongest data center growth in 15 years underscores how AI demand is reshaping the chip market, pulling resources toward servers and away from PCs.
Persistent DRAM and NAND price increases are raising the cost of PCs, a squeeze Intel says could last into 2027.
Intel Foundry's losses are narrowing, a key sign in the company's effort to build a viable contract chipmaking business.
Background
Intel, one of the world's largest chipmakers, is in the middle of a multi-year turnaround effort under chief executive Lip-Bu Tan, including building out its foundry business and shifting production to newer process technologies. The latest earnings show that turnaround proceeding unevenly, with AI-driven data center demand booming while consumer computing struggles.
Key Perspectives
David Zinsner (Intel CFO): Called the data center growth Intel's strongest in 15 years.
Lip-Bu Tan (Intel CEO): Says Intel's immediate priority is unlocking additional supply to meet extraordinary demand for the Xeon family, with substrate availability limiting output for some time.
Intel: Expects the PC slowdown to continue at least through the first half of next year, with memory and NAND pricing pressure persisting into 2027.
What to Watch
Whether substrate supply constraints ease and allow Intel to ship more Xeon processors.
Whether DRAM and NAND prices moderate as Intel expects, and when PC demand recovers.
Whether Intel Foundry's operating losses continue to narrow as wafer costs fall.
12 claims in this story checked against 1 source: 12 supported.
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SupportedIntel's Data Center and AI revenue rose 78% year over year.ServeTheHome: “The Data Center and AI (DCAI) group delivered $7.3 billion in revenue, up 78% year-over-year.”
SupportedIntel's PC business declined amid memory costs and shortages.ServeTheHome: “Higher DRAM and NAND prices are pushing system costs up and hurting demand.”
SupportedIntel reported third-quarter revenue of $16.5 billion, up 21% year over year.ServeTheHome: “Intel reported third-quarter 2026 earnings with revenue of $16.5 billion, up 21% year-over-year.”
SupportedIntel expects the PC slowdown to continue at least through the first half of next year.ServeTheHome: “Intel expects the PC slowdown to continue at least through the first half of next year.”
SupportedClient Computing and Physical AI Group revenue fell 5% year over year to $8.1 billion.ServeTheHome: “Client Computing and Physical AI Group (CCPG) revenue fell 5% year over year to $8.1 billion.”
SupportedIntel cited industry-wide memory shortages as affecting the total addressable market.ServeTheHome: “On the call Intel cited industry-wide memory shortages impacting the total addressable market.”
SupportedHigher DRAM and NAND prices are pushing system costs up and hurting demand.ServeTheHome: “Higher DRAM and NAND prices are pushing system costs up and hurting demand.”
SupportedData Center and AI revenue was $7.3 billion, up 78% year over year.ServeTheHome: “The Data Center and AI (DCAI) group delivered $7.3 billion in revenue, up 78% year-over-year.”
SupportedCFO David Zinsner called the growth Intel's strongest data center revenue growth in 15 years.ServeTheHome: “David Zinsner, Intel’s CFO, called it Intel’s strongest data center revenue growth in 15 years.”
SupportedThe market has shifted toward AMD's 192-core Turin processors, for which Intel has no direct competitor.ServeTheHome: “the demand in the market has shifted towards AMD’s 192-core Turin parts, which Intel does not have a direct competitor for”
SupportedServeTheHome said partners told it Xeon 6 is selling because basically everything is selling.ServeTheHome: “partners tell us that Xeon 6 is selling because basically everything is selling.”
SupportedIntel Foundry posted $6.7 billion in revenue, up 58% year over year, including intersegment transactions.ServeTheHome: “Intel Foundry posted $6.7 billion in revenue, up 58% Y/Y, though that figure includes intersegment transactions rather than external customer sales alone.”
