Intel Corporation (NASDAQ: INTC) has delivered a striking reversal in operating profitability, even as its foundry division continues to record substantial losses that dominate the spending debate among investors.
The stock trades at $91.13, roughly 35% below its 52-week high of $140.94, and has shed 3.8% over the past three months despite climbing more than fourfold over the prior year.
A late-July trading session saw Intel shares fall approximately 6% intraday, with AMD dropping around 8% in the same session, reflecting a broader selloff across semiconductor names.
The central argument surrounding the stock is capital expenditure, with Intel raising its 2026 capital budget to more than $20 billion against trailing twelve-month revenue of $57.0 billion.
What that spending debate routinely ignores is the operating margin improvement: 7.6% over the trailing twelve months, compared with -8.3% in the same window a year earlier.
The path to that figure was not linear, with operating margin running at -4.4% three years ago before deteriorating further to -8.3%, then swinging to a positive 7.6% over the most recent trailing period.
On trailing twelve-month revenue of $57.0 billion, that translates to roughly $4.3 billion of operating profit, a figure that already absorbs the foundry’s losses rather than excluding them.
The top-line acceleration drove much of the turn, with year-over-year quarterly revenue growth moving through readings of 2.8%, then -4.1%, then 7.2%, before reaching 25% in the most recent quarter.
In fiscal Q2 2026, the data center and AI group generated $6.3 billion in revenue, up 59% year over year, producing $2.5 billion of operating profit at a 40% segment margin.
The PC and edge business contributed $8.9 billion in revenue and $2.3 billion in operating profit, representing a 26% segment margin in the same quarter.
Intel Foundry posted an operating loss of $2.1 billion in fiscal Q2 2026, which was $348 million narrower than the loss recorded in fiscal Q1 2026, with management crediting improved yields, cycle times, and factory scale.
Non-GAAP gross margin held at 42% in fiscal Q2 2026, with guidance for fiscal Q3 2026 also coming in near 42%, meaning gross margin itself was not the driver of the operating line improvement.
Management acknowledged that new products entering the revenue mix remain below the corporate average gross margin because they are early in their life cycle, which constitutes the core of the bear argument on margins.
Intel says it has cut the cost of its Panther Lake part by roughly 50% so far in 2026, with an additional 20% reduction on track and further reductions planned for 2027.
Management also flagged that shortages in leading-edge wafers, memory, and substrates rank among the most severe in the industry’s history, and expects PC consumption to fall by a low double-digit percentage across all of 2026.
The stock trades at 8.2 times trailing sales against a ten-year range of 1.5 to 12.5, placing it far from bargain territory on a price-to-sales basis.
Net margin over the trailing twelve months stands at -19.8%, an improvement from -39% a year earlier, but the roughly $4.3 billion earned at the operating line is still being consumed by charges sitting below it.
The operating margin of 7.6% remains a considerable distance from the roughly 34% operating margin the company earned at its peak, and the foundry’s narrowing loss is the figure most worth watching when fiscal Q3 2026 results are reported.
