Intel surges 20%, CPUs must reclaim all lost ground in the Agent era

Last night, Nvidia’s stock price briefly touched $70 during trading, then surged 20% after hours, due to its latest earnings surpassing everyone’s expectations.

Intel disclosed its Q1 2026 fiscal year results on Thursday, with revenue of $13.6 billion, up 7% year-over-year, beating Wall Street consensus by 11%. Non-GAAP earnings per share were $0.29, compared to analysts’ expectations of $0.01, exceeding forecasts by 29 times, a rare gap among large-cap stocks. After the announcement, Intel’s stock rose as much as 20% in after-hours trading.

The Q2 guidance also pointed in a more aggressive direction, with revenue guidance between $13.8 billion and $14.8 billion, above the median of consensus estimates. New CEO Lip-Bu Tan summarized the performance in a single sentence during the conference call, implying that CPUs are re-establishing their indispensable role as the foundation of the AI era.

This is one of the most discussed topics in the market about Intel over the past two years, as the company was once considered to have completely missed the first wave of AI.

On one hand, it failed to develop GPUs comparable to Nvidia’s, and on the other hand, its advanced manufacturing nodes lagged behind TSMC. But over the past 12 months, as more AI deployments shifted from model training to inference and autonomous “agent” orchestration, CPUs—once seen as basic “computer brains”—have become increasingly necessary again. Intel’s rebound this quarter marks the first financial realization of this technological narrative.

Data Center Business Reverses in a U-Shape

Breaking down the $13.6 billion in Q1, the most critical change comes from the Data Center and AI (DCAI) segment. According to Intel’s earnings report, DCAI revenue hit $5.1 billion in a single quarter, up 22% year-over-year, setting a new record.

This isn’t a one-time spike. Looking back to 2025, DCAI revenue was $4.1 billion in Q1, dropped to $3.9 billion in Q2, then returned to $4.1 billion in Q3. During mid-2025, this sideways movement led the market to doubt whether the so-called “CPU revival” was just a narrative. Then, in Q4, according to Intel’s disclosures summarized by Tom’s Hardware, DCAI jumped from $4.1 billion in Q3 to $4.7 billion, a 15% quarter-over-quarter increase, the fastest single-quarter growth in a decade for the company.

Entering Q1 2026, the $5.1 billion figure forms a clear U-shape curve, with the trough in mid-2025, the inflection point in Q4 2025, confirmed in Q1 2026. Management explained that the Xeon 6th generation “Granite Rapids” processors began mass production, combined with a refresh cycle for AI infrastructure. The company even deliberately sacrificed some client CPU capacity to prioritize data center wafers, boosting overall DCAI profit margins. According to Intel’s Q3 2025 financial report, operating margin for this segment rose from 9.2% in Q3 2024 to 23.4%, nearly 2.5 times higher.

The Same AI Narrative, Three Different Trends

Placing Intel’s rebound in the context of its peers reveals a more interesting chart than just price changes.

Starting from January 2023 to April 2026, Nvidia’s stock index soared to 1023, AMD reached 406, while Intel was at 245. All three started at the same point, but their endpoints differ by nearly five times. What’s more interesting is the shape of Intel’s blue line—it didn’t climb steadily. Instead, it plunged to 64 in September 2024 (a 36% drop from the start), then formed a V-shaped rebound, finally catching up to 245 in early 2026.

This chart essentially reflects two rounds of market pricing for “who really profits in the AI capital cycle.” From 2023 to 2024, money flowed into Nvidia because training required GPUs. AMD took a second slice with the MI300 series, and its stock followed. Intel was systematically removed from the AI trading list due to lower-than-expected Gaudi accelerator sales and delays in advanced process mass production. According to third-party estimates cited by Fortune in January 2025, Nvidia’s market share in AI chips rose from 25% in 2021 to 86% in 2024, while Intel’s share fell from 68% to 6%.

The second pricing wave occurred from late 2025 to early 2026, as the market began to reconsider whether, as AI shifted from training to inference and agent phases, the demand structure for compute power would change. The answer to this question directly determines how far Intel’s blue line can go.

As the Scene Moves Closer to Agent, CPUs Return to Center Stage

Breaking down AI workflows into three scenarios shows that CPUs’ importance varies greatly. According to Deloitte’s 2026 technology trend report, during the large model training phase, CPUs account for only about 8% of the bottleneck in workflows, with the remaining 92% of compute pressure on GPU clusters’ parallel synchronization—Nvidia’s domain. In the large-scale inference phase, CPU importance rises to 25%, but GPU parallel throughput and memory bandwidth remain bottlenecks.

The real change occurs in agent orchestration scenarios. A joint study by Georgia Tech and Intel published in November 2025 found that CPU processing for tool calls in agent workflows accounts for 50% to 90% of total delay, depending on tool type and orchestration complexity. In other words, when an AI agent performs “API calls, data retrieval, subtask coordination, context memory management,” the bottleneck is not the GPU but the CPU.

This trend has measurable scale. Deloitte estimates that inference workloads accounted for about one-third of AI total compute in 2023, about half in 2025, and are projected to reach two-thirds by 2026. According to Futurum Group, the server CPU market will grow from $26 billion in 2025 to $60 billion in 2030, exceeding long-term historical growth rates. A more specific signal comes from OpenAI’s disclosed compute roadmap, which plans to acquire “hundreds of thousands of the most advanced Nvidia GPUs and scalable tens of millions of CPUs to support agent workloads.” GPUs remain dominant, but for the first time, CPU quantities are publicly listed in the same context.

The Rebound Didn’t Start in Q1 2026

Looking at Intel’s stock price over five years alongside six key events shows that the 20% after-hours surge in Q1 was the culmination of earlier decisions.

In February 2021, Pat Gelsinger returned as CEO, unveiling the “IDM 2.0” strategy to make Intel both a chip designer and an open foundry. In April 2024, when Gaudi 3 launched, Intel set a $500 million sales target for AI accelerators in 2024.

On August 2, 2024, Intel’s Q2 2024 earnings report disappointed, with revenue of $12.8 billion, down year-over-year, GAAP EPS of -$0.38, announcing 15% layoffs and halting dividends. The stock plummeted 26% in a single day—the worst since 1974. Intel disclosed that management later admitted Gaudi 3 would not reach the $500 million target for the year, and $300 million was written down for inventory.

According to Intel’s official announcement, Gelsinger resigned on December 1, 2024, and the company entered a temporary co-CEO phase. In February 2025, the new leadership decided to cancel the independent GPU project “Falcon Shores,” acknowledging that their in-house AI accelerator route couldn’t match Nvidia’s ecosystem lock-in. On March 18, 2025, former Cadence CEO and veteran semiconductor executive Lip-Bu Tan officially became Intel’s CEO. At that time, Intel’s stock was around $22, just a little above the $18 low in September 2024, a gain of only about 20%.

From Tan’s appointment to this Q1 earnings, Intel’s stock rose from $22 to nearly $65 before earnings, and with the after-hours 20% increase, it touched around $78. If August to December 2024 was the company’s darkest period, the real start of the rebound was not in Q1 2026, but when they canceled Falcon Shores and appointed Tan as CEO. The company abandoned its Nvidia comparison dream and returned to its core strength—CPUs.

A 29-fold EPS beat is a financial signal, but behind it are two simultaneous developments. The market is re-pricing the role of CPUs in AI architectures, and Intel has just completed leadership changes and product line decisions. Neither happened in Q1.

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