Chief Executive Officer & Director, Intel Corp
Intel CEO on Q2 outlook: Market is a little bit weaker
Intel (INTC) posted first quarter earnings revealing better-than-expected profit but a lower-than-expected second quarter revenue forecast. While the market's immediate reaction sent shares lower, the chipmaker promises more for the future as one of the largest recipients of CHIPS Act grants to expand US chipmaking capacity.
Intel CEO Patrick Gelsinger joins Yahoo Finance Executive Editor Brian Sozzi for Wealth! to give insight into the company's more cautious second quarter outlook, broader market weakness, and hot AI PC demand.
Gelsinger elaborates on what is in store for the future of Intel...
About Patrick Gelsinger
In Intel's Q1 2026 earnings call, Gelsinger described 2026 as "the year of execution" and stated that the conversation about Intel had shifted from whether the company could survive to how quickly it could add manufacturing capacity. He announced a partnership with SpaceX, xAI, and Tesla to support "Terrafab," citing a shared conviction that global semiconductor supply is not keeping pace with demand. Gelsinger also noted that Intel funded its purchase of a 49% equity interest in Fab 34 in Ireland with approximately $7.7 billion in cash and $6.5 billion in new debt. Since leaving Intel, Gelsinger has taken on roles as a general partner at Playground Global, executive chairman at Xlight, and chairman of Gloo, a company building technology for faith-based communities. In public appearances, he has argued that the U.S. needs an explicit industrial policy for semiconductors, calling the absence of such policy a national risk and advocating for a U.S. sovereign wealth fund focused on semiconductors, critical materials, and energy. He has also spoken about AI from a faith perspective, stating that mainstream AI "doesn't have values" and comparing the current moment to the invention of the printing press, urging the faith community to "show up" to shape AI for good.
Transcript (12 segments)
✨ AI-enhanced transcript with speaker attribution
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Reporter0:00
Intel reported strong first quarter earnings on Thursday after the closing bell, but lots of focus by investors on the company's outlook, which are putting some pressure on shares of Intel today. Let's get right to Intel CEO Pat Gelsinger. Pat, thanks for always making time with us. I know these are busy days, you're always traveling the country, but thank you as always. Let's talk a little bit about that outlook, and then we'll go back to the quarter a little bit. Tell us and explain to us some of the things you're seeing that warranted that a little bit more cautious second quarter guidance. The street was expecting it.
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Patrick Gelsinger0:31
Thanks, Azy. Coming off a strong Q1, we see a lot of progress in the second half of the year, but a little more tepid in Q2. Some of that was the strength of Q1 — we were able to see a little better earnings than we expected in Q1, but some of that was there. Overall, the market is a little bit weaker, even as everybody is projecting the second half being much stronger. So that outlook, a little bit of reaction for it, but from our view, a first half, second half story, similar to what we saw in '23, is what we're presenting. We have a lot of great things happening in the second half of the year, so we feel very comfortable with the outlook that we had. Very proud that we had good solid execution in the first quarter of the year, and the long-term strategy is coming together as we would expect. We got a lot done in the first quarter, a lot to build on for the future.
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Reporter1:24
Pat, that weakness — is it PC demand or is it demand from big companies or enterprises?
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Patrick Gelsinger1:31
I'll say overall the market was a little bit weaker as we see it shaping up in Q2, but returning in the second half of the year. So it's a bit of market weakness. We also saw some unique issues. The AI PC is hot, and we weren't able to satisfy all of the demand requests that we've got. So we're meeting our commitments, but we're not hitting all of the upside requests. A little bit of our own opportunity there that we weren't able to fully realize yet, that we're working hard to satisfy those market requests. Overall, we also have businesses that are coming out of inventory challenges as well. We saw that with Mobileye, our FPGA business, our NX business. As they finish their inventory improvements, which we see happening very naturally in those businesses, the second half will be markedly better as well. So unique inventory, some in the market, and some of our own catching up to accelerated demand, particularly in the hot AI PC category.
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Reporter2:30
I haven't heard you say that before — hot AI PC demand. Now, obviously these products are just hitting the market. Are you still looking for 40 million shipments this year?
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Patrick Gelsinger2:40
Yeah, I'm driving our team super aggressively. Every day the market is reinforcing the enthusiasm for the category. We believe that we can go over 40 million units this year. I'm going to push our team super aggressively. Obviously, the Core Ultra is the defining product for the AI PC category. We'll be introducing our second generation product with code name Lunar Lake and Arrow Lake later this year. As competitors start to show up with their first, we're delivering a second generation. Our third generation product, which we call Panther Lake, is our first on 18A, the next generation process technology, and that'll be coming forward next year. So we really have a strong roadmap lined up. Lots of ISVs, compelling use cases across collaboration applications, developer applications, training. I'm even showing off how we're using the AI PC in our own factories for improved yield and performance management of our factories. So it's a really exciting period of time. I think the biggest cycle of PC surge is just getting started with the AI PC, and of course a Windows refresh later this year will be helpful for the category as well.
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Reporter3:56
Pat, every time I talk to you I'm always blown away by how much there's just going on inside of Intel right now. All these new products that we've talked about today and over the past year — are they all on schedule for this year to release on time, and customers will get them?
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Patrick Gelsinger4:11
Yeah. One of the things I'm really proud of over the three years of rebuilding Intel is we've gone from a period where customers couldn't trust us to hit our product schedules, and now we're hitting the front end of our best case schedules with customers pretty much across the board. That is just really rebuilding their confidence. For instance, we just announced Sierra Forest, our first Xeon 6 product with our high very efficient power performant cores as part of it. That was a best case schedule that we delivered. The first product on Intel 3, coming into the marketplace, and the first time in a decade that the US has been manufacturing the most leading edge technology in the world. So products like that are rebuilding confidence. A stronger product line allows us to stabilize and regain market share. Overall, we're doing what we said we would, and I'm proud of the execution of our team in making that happen.
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Reporter5:12
Pat, very early this morning I was taping my new podcast Opening Bid, and the guest that we had on really reminded me that over time stocks do in fact go up, and it's all about investing for the long term. I think a lot of investments you're putting into your business today are for the long term. So by 2030, what does Intel actually look like?
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Patrick Gelsinger5:31
Well, by 2030, we believe that we will become the leading AI systems foundry and the second largest foundry in the world. A business that today, as you see in the numbers, is tiny today for external foundry, but we see this becoming a very large capability. Consistent with a theme that we've talked about, the world needs geographically balanced, trusted, sustainable supply chains, and we're going to make that happen in the semiconductor segment. We saw the CHIPS Act coming forward this last quarter as really putting that stamp on the national champion Intel and what we're doing with the total $45 billion grant package. The milestones that we're hitting in our own technology development and these new products are coming to life, showing that we're hitting the technical and manufacturing milestones to make those real. As those products and technologies ramp, the financials, as I would like to say every quarter for my foundry business, gets better from now to the end of the decade. Revenues improve, margins improve, profitability will be growing. This will just be that every quarter we just see that progress as we go through the rest of the decade. So I'm very confident that we're doing what we said we would, maybe the most important strategic turnaround in corporate history, and we are on track to make that happen.
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Reporter6:52
Pat, lastly before I go, like I mentioned, you have a lot going on in Intel from a leadership perspective. How do you know where to spend or devote most of your time? One minute I see you hanging out with the president, and now you're talking to me, you had the earnings call last night. What are your days looking like?
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Patrick Gelsinger7:10
Well, obviously to me, spending time with customers and my engineering and manufacturing teams — those are to me the most critical things that I do. Making sure that we're rebuilding that customer relationship, our products are hitting the needs. And then, I'm a geek at heart, as you know, Brian, spending time with the engineers making sure we're rebuilding the execution machine and the technology roadmaps. But as any CEO, you have many other hats to wear, whether that's the financial hat, whether that's the press and relationship hat such as this one, whether that's the government affairs hat that you see me wear. But the ones that I want to spend the vast majority of my time are the customer hat and the internal facing hat to make sure we're rebuilding this iconic company, a critical role for the nation, the industry, and the world. And we are on that every day.