Taking advantage of “layoffs” again on the eve of the second quarterly report, can the Intel (INTC.US) data center business support valuation repair?
The Zhitong Finance App learned that semiconductor giant Intel (INTC.US) is scheduled to release second-quarter earnings after closing on July 23. Analysts are unanimous in expecting Intel earnings of $0.22 per share and revenue of $14.45 billion.
On the eve of the earnings report, a new round of layoffs initiated by Intel against the Data Center Division (DCAI) sparked heated discussions. Wade Bush Securities said that Intel's latest round of layoffs (this time in the data center division) shows that CEO Chen Liwu is still restructuring the company's organizational structure.
Analyst Matt Bryson wrote in a report to customers, “Intel said its product promises and roadmap remain the same, and characterized this move as a more streamlined data center and artificial intelligence division (DCAI). This is also part of its overall restructuring plan — over the past four years, the plan has reduced the total number of employees by about 40%, from about 132,000 in 2022 to about 81,000.” “We think this news continues to indicate that Chen Liwu has yet to complete the restructuring of Intel's architecture (although there have been some signs of improvement in execution and improvements in basic demand).”
It's unclear how many employees will be affected. Intel notes that the layoffs will not change product promises or the company's roadmap; rather, Intel hopes these changes will improve efficiency.
Intel's Data Center and Artificial Intelligence (DCAI) division focuses mainly on server CPUs, custom AI chips, and data center architectures. In the first quarter of 2026, the division's revenue increased 22% year over year to reach $5.05 billion.
An Intel spokesperson said, “As part of our larger strategy to build a more focused and efficient company, our data center department is making adjustments to ensure the right positions and skills to protect the long-term success of the business.” “We are committed to respecting all of our affected employees and providing resources to support them through this transition period.”
The AI Wave and Data Center (DCAI) Demand Remediation
Analysts pointed out that the AI industry is gradually evolving from “GPU large model training” to “CPU-coordinated real-time inference and agent architectures.” This trend has reinvigorated the market's strong demand for high-computing server CPUs. According to Wall Street expectations, the data center and AI business (DCAI) in the second quarter will be the biggest pillar supporting Intel's performance and gross profit recovery.
In addition to traditional chip sales, the market focused on listening to the latest outlook on Intel's foundry services from executives during a conference call. HSBC (HSBC) recently raised Intel's target price to $200. Its core logic is to be optimistic about the yield improvement of advanced process nodes such as 18A and the implementation progress of potential external customers (such as Tesla, Apple, etc.).