Intel Earnings Report: Why Q2 Revenue Beat Couldn’t Stop a Stock Slide

Intel reported a positive second-quarter 2025 with revenue beating Wall Street Estimates. However, intel stock fell on July 24th. So, why did Intel stock fall? Well, on the surface, the company beat revenue expectations with revenue coming in at $12.9 billion. 

However, this small victory was completely overshadowed by a net loss of $2.9 billion. Additionally, investors were left disappointed as the company said that it expects steeper losses than Wall Street forecasts in Q3. It also announced plans to slash jobs. Let us break down exactly what unfolded in Intel’s Earnings Report for Q2 2025.

Intel Earnings Report: Financials: At a Glance

Intel’s top-line numbers show clearly that while the company’s sales are holding steady, its profits are sliding fast. Here’s a look at key metrics from Intel’s Q2 earnings report.

Source: Intel Earnings Report

Why did Intel Stock Fall Despite Q2 Revenue Beat?

Intel share price falling nearly 4%, according to Google Finance data after the earnings report is not a mystery, it was a direct reaction to several deeply concerning metrics.

• Restructuring Charges: The headline number is Intel’s enormous net loss, caused by $2.9 billion in one-time charges, including $1.9 billion for restructuring activities like severance and plant shutdowns, and asset impairments.
• Margin Collapse: Intel's gross margin also fell off a cliff, plunging to 27.5% from 35.4% a year ago. This indicates that the cost of producing its chips is rising relative to their selling price.
• Stagnant Businesses: While Intel’s total revenue was flat, the performance of key segments was dull. The Client Computing Group (PCs) saw revenue decline 3% year-over-year, while the Data Center & AI group was flat. This shows a lack of growth in the divisions that have historically driven the company's success.
• Negative Cash Flow: The company reported a negative free cash flow of -$1.1 billion for the quarter, meaning it spent more cash than it generated. This, combined with a heavy capital expenditure of $4.5 billion, highlights the immense cost of its foundry ambitions.

The market reacted swiftly to this showing that investors are looking past the top-line beat and focusing on the painful and costly restructuring underway at Intel.

The Story Behind Intel's Earnings: A Painful Pivot

To understand the quarter, one must look at the enormous one-time costs Intel absorbed as part of its aggressive turnaround strategy.

Source: Intel Earnings Report

Without these charges, Intel's non-GAAP EPS would have been a profit of $0.10. This shows that while Intel’s underlying business is struggling with profitability, the headline loss was driven by these deliberate, strategic write-offs.

This struggle is most evident in the company's shrinking margins.

Source: Intel Earnings Report

Intel’s Segment Revenue Breakdown: A Mixed Bag

The new Intel Foundry Services (IFS) segment showed modest growth but the core PC and server businesses remained flat, unable to drive the company forward.

Source: Intel Earnings Report

What's Next for Intel after another dull quarterly earnings report?

Intel's management is executing a painful but necessary pivot with a strategy that is built on aggressive cost-cutting and a more disciplined approach to its foundry plans. Here’s a look at Intel’s strategy.

• Aggressive Cost Cutting: It is targeting annual operating expenses of $17 billion in 2025 and $16 billion in 2026.
• Layoffs: Intel is planning to reduce headcount by 15% to 75,000, and management layers by 50% by the end of year through attrition and "other means.
• Capital Discipline: It has stopped building fabs on speculation, slowing major projects in the US and Europe and tying all spending to firm customer commitments.
• Differentiated AI Strategy – Instead of competing with Nvidia on training large AI models, Intel is focusing on AI inference and agentic AI to build a more profitable niche.

While the company’s Q2 earnings showed signs that demand in its core markets is stabilizing, the enormous costs associated with this pivot are weighing heavily on the company’s profitability.

Investors are now watching for the next crucial phase which has some proof that these aggressive cuts and strategic shifts can translate into sustainable margin improvement and positive cash flow for Intel. For now, the market's verdict is that the pain of the present outweighs the promise of the future.

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