Keki Sensei 🎂 ❤

$INTC Q2 2026 Earnings Preview - 7/23, After Market Close I said it multiple times before and I will say it again: Intel’s balance sheet and earnings will flip on a dime, thanks to Intel Foundry. And Wall Street still isn’t fully ready. The re-pricing is not complete for the near-term roadmap (this year alone), where Intel’s FCF trajectory and P/E multiple will turn on its own axis. Current Consensus Estimates: - Revenue ~$14.4 - 14.7B (Street avg ~$14.4 - 14.68B) Non-GAAP EPS ~$0.19 - 0.21 - Company guide from Q1: --> Revenue $13.8 - 14.8B (mid ~$14.3B), non-GAAP GM 39%, non-GAAP EPS $0.20, GAAP EPS $0.08. Q1 actual was a massive beat ($13.6B rev, $0.29 non-GAAP EPS vs much lower Street). Stock has ended up re-rating to the ~$110 mark, with market cap ~$550–565B. The bar is higher, but the setup for another positive surprise is real. __________________________________________________________ What matters most for a positive reaction: 1. Beat and a sequential growth with improving supply. - CPU demand remains strong, even with their pricing power. Increased cost seemingly has not brought demand downward on the trajectory. The constraint has been supply, not demand. As 18A ramps (Panther Lake as we know is already in high-volume production and shipping), more product hits the market to satisfy the clear demand they have stated is not constrained. DCAI sequential growth (guided double-digit in Q1) and better CCG supply should drive the top line. Margins should expand as the mix improves and early 18A ramp costs normalize. 2. Capex commentary is the potential rocket fuel (get it? because $SPCX Terafab. funny? no? okay, let's move on) - Watch this closely. If management raises capex or reallocates more toward tools / capacity (specifically because of customer roadmaps), for advanced packaging, glass substrates, High-NA EUV for 14A, or EMIB-T expansion, then that is bullish. It signals real external demand and volume commitments. Capex was guided roughly flat-to-slightly-down overall with higher tool spend. Any upward revision tied to hyperscaler / foundry wins will be read as validation, not waste. “We’re investing more because the customers are here and the lines need to ramp”, to me is a strong catalyst. 3. Foundry turnaround becoming material - Foundry, as we know, is the multi-year asymmetric upside. Advanced packaging (EMIB / EMIB-T) is quietly turning into a multi-billion rocket ship (same joke again, let's move on). TSM CoWoS remains sold out deep into 2027. Intel’s CFO David Zinsner has upgraded external packaging commentary to “billions per year” once the first lines fully ramp and also noted strong engagement and deals close to closing. __________________________________________________________ I have used this example before, but I find it apt for the Earnings preview itself. Think about the packaging roadmap like this, in the barebones state: - 1 meaningful deal (e.g., $GOOGL Google TPU packaging or early $TSLA Tesla Terafab-related work) = $1–3B annual run-rate by end of this year / into 2027. Shows up in H2 numbers and proves the model. - 2 deals (Google + $AMZN Amazon Trainium or similar) = run-rate in 2027–2028. U.S./Vietnam/Malaysia capacity expansions make this executable. EMIB-T is built for the huge multi-die AI chips everyone wants. - 3+ deals (add $AAPL Apple silicon packaging, Meta, or others) = $10–20B+ annual packaging revenue by 2028–2030. Wafer wins typically follow packaging wins. This becomes the on-ramp to full Foundry scale. Intel doesn’t need every deal to win big, and does not need to beat TSM right now. That's not what this is about. Even partial execution while TSM is capacity-constrained and geopolitical risk remains is a game-changer. Foundry losses should continue narrowing as utilization and external mix improve. Positive commentary on external packaging revenue, customer wins, or yield progress on EMIB-T (already showing strong high yields in recent technical updates) will move the needle hard. __________________________________________________________ 3 core thesis points that need more talking about: 1. The CPU shortage is real and Intel confirmed the issue is supply, not demand - Immense demand exists across client and especially data center/agentic AI workloads. When supply constraints ease further (Q2 and H2 with 18A/Panther Lake ramp), volumes and margins improve. Xeon remains the cost-effective, high-TCO host CPU of choice for many hyperscalers. 2. Rising demand for cost-effective, margin-improving silicon is real - Hyperscalers and enterprises continue looking for TCO improvements without sacrificing too much performance. Intel’s Xeon and platform approach delivers this better than pure “more FLOPS at any cost” solutions. Not every customer will pay Nvidia / $AMD premium pricing indefinitely. Business is business and ROI matters. Intel is positioned for the more rational, scaled AI buildout. 3. The Foundry bottleneck against the hedge of a monopoly with limited capacity - $TSM cannot deliver everything, everywhere, all at once. Intel Foundry may never be more than a strong #2 in leading-edge wafers, and it doesn’t need to be. Execute on packaging first (the near-term multi-billion opportunity) and the rest follows. Customers are there. We all know they have them. It’s only a matter of time until this is more fully validated in the numbers and guidance. __________________________________________________________ A beat on revenue / EPS, with any positive Capex raise tied to customer demand, and Foundry / packaging that shows external revenue momentum or narrowed losses means we have another strong reaction and continued re-rating. The core products business is already generating solid profits that fund the Foundry build. FCF is expected to turn positive for the full year. The market has barely re-priced the recovery story. It has not fully priced the packaging ship or the multi-year Foundry optionality if even half the pipeline converts. Q2 is the next proof point of this growth story we get to watch play out in real time. We must watch Capex language and packaging commentary above all. __________________________________________________________ Look, Intel is working with the whole Mag 7. Don't forget that. Intel partners with every major neocloud, and these are major collaborations. Intel is staked by the movest valuable company on the planet $NVDA. It is staked by $SFTBY Softbank. It is staked by the US Government $DJT. It is being backed by Elon Musk's Tesla / SpaceXAI. Let us not lose sight of the fact that the most powerful people and institutions on the planet have Intel's back. And Intel, themselves, have the superteam to execute on the backing. It is led by the most brilliant minds on the Executive team and one of the best CEOs in this space (no pun intended. the joke that never stopped). This is America's most valuable asset. It is the greatest company in the world, and somehow only a small % of people even understand what Intel is doing. The future of memory, the future of robotics, the future of Quantum Computing - these are all verticals that Intel has its grasps on. They have been researching and building on these areas for years. So, by the time it comes to fruition, Intel will be way ahead of everyone else. Except its investors. Only we will be there. A generational earnings is coming soon. The whole narrative is about to flip around. Now? Maybe. But, this next year looks prime. LONG. LIVE. INTEL.