Intel reported second-quarter revenue of $16.1 billion on July 23, up 25 percent year-over-year. That is the company’s strongest growth in more than 15 years, driven almost entirely by demand for AI chips.

The turnaround is real. Two years ago, Intel faced existential questions. Now it is benefiting from the same AI boom that lifted its rivals. But skeptics ask: can Intel sustain this?

Data Center and AI Lead the Charge

Intel’s Data Center and AI segment posted revenue of $6.3 billion, up 59 percent year-over-year. The client computing group, which makes chips for PCs, delivered a modest 13 percent gain to $8.9 billion. Intel Foundry Services, the company’s bid to become a contract chipmaker, grew 31 percent to $5.8 billion.

Wall Street had expected revenue of $14.42 billion and adjusted earnings of 21 cents per share. Intel delivered $16.1 billion and 42 cents—double the profit forecast.

The Catch: Spending Outpaces Revenue

Second-quarter earnings per share hit negative $2.16 under GAAP accounting, though adjusted EPS came in at 42 cents. Capital expenditures soared 142 percent to $5.79 billion from $2.39 billion in the same quarter last year.

Free cash flow remains under pressure. Intel is betting that AI demand will justify the spending, but investors are waiting to see proof that the company can convert capex into sustained profit.

Third-Quarter Outlook Tempers Enthusiasm

Intel guided Q3 revenue to $15.8 billion to $16.8 billion, with EPS of 31 cents and non-GAAP EPS of 38 cents. The forecast suggests growth is slowing relative to Q2’s 25 percent surge. Margins remain compressed by high spending.

Competitors like AMD and NVIDIA are also investing heavily in AI infrastructure. Intel’s window to recapture market share is not infinite.

Intel’s AI resurgence is real, but sustained profitability remains the question the market needs answered.