One Reason Intel Stock Looks Better Than Its Price

One business stands out at Intel (INTC): the chips it sells for data center servers, and that's what Intel bulls might be betting on. You probably still think of Intel as a PC chip company, but the ground reality has shifted. Intel stock returned 258% over the past twelve months, against 16.0% for the S&P 500. The company still reported a loss over its last twelve months. Therein lies the contradiction and it hinges on the data center bet. So, how big has Intel's data center business become?

Data Center Sales Reached $6.3 Billion In Fiscal Q2

Intel's data center business had revenue of $6.3 billion in fiscal Q2 2026, up 59% from a year earlier. Intel's total revenue grew 25.4% over the same period. The PC chip business is still larger, with revenue of $8.9 billion in that quarter, but it grew more slowly. Compared with the prior quarter, PC chip revenue grew 15% and data center revenue grew 24%.

Management expects demand to keep growing. On the fiscal Q2 2026 call, it said its outlook for server CPU demand had improved again. A server CPU is the main processor in a data center server. Management forecast strong double-digit unit growth for the industry in 2026 and 2027, with momentum extending into 2028.

Does Intel Make Money From Data Centers?

Yes. Data center operating profit, meaning profit after running costs, was $2.5 billion in fiscal Q2 2026. The PC chip business earned $2.3 billion on more revenue. Intel kept 40 cents of operating profit from each dollar of data center sales, against 26 cents from PC chips. Between the two, the faster-growing business is also the more profitable one.

Intel as a whole still reported a net loss of $11.3 billion over the last twelve months. A price-to-earnings ratio, the share price divided by profit per share, is therefore not meaningful. Measured on sales, the stock costs 10.7 times revenue, against 3.0 times for the S&P 500.

Intel is raising its spending at the same time. Management lifted its 2026 capital spending outlook to more than $20 billion and expects 2027 to be significantly higher. Intel's larger business also faces a weaker market. Management expects PC consumption to be weak in the second half of the year and to fall by a low double-digit percentage for all of 2026.

What Would Show Intel's Data Center Growth Stalling?

Flat or falling data center revenue would be the first sign. Revenue could stall if Intel runs short of chips to sell. Management said demand for Intel's products continues to outpace its growing supply. Management also said new supply would be weighted toward the end of fiscal Q3 2026 and into Q4, especially for servers.

For fiscal Q3 2026, management guided revenue to a range of $15.8 billion to $16.8 billion. Intel has not yet reported the result. Intel reported $16.1 billion for fiscal Q2 2026. A result of $16.1 billion or less would mean no growth from that quarter. The guidance covers all of Intel's revenue, not data centers alone.

Competition is a second risk. On the same call, management was asked about its server market share against AMD. Management said Intel is still behind in some areas but is catching up very fast.

Intel's data center business looks better than its PC chip business on growth and on profit per dollar of sales. The first risk is that Intel cannot make enough server chips to keep that growth going. Intel's fiscal Q3 2026 report is the next result that will show whether supply kept up. Data center revenue at or below the $6.3 billion of fiscal Q2 would show the business has stopped growing quarter to quarter.

Does This Mean You Should Act On INTC?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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