Intel's data center division generated $6.3 billion in revenue during fiscal Q2 2026, a 59% increase from the prior year. This growth significantly outpaced the company's overall revenue expansion of 25.4% for the same period, marking a shift in the firm's primary growth engine away from its traditional PC chip business.
The data center segment now accounts for a substantial portion of Intel's operations, though the PC chip business remains larger in absolute terms with $8.9 billion in revenue for the quarter. While PC chip revenue grew 15% from the previous quarter, data center revenue rose by 24%. Management indicated on the fiscal Q2 2026 earnings call that the outlook for server CPU demand has improved, forecasting strong double-digit unit growth for the industry in 2026 and 2027, with momentum expected to continue into 2028.
Profitability in the data center segment also exceeded that of the PC division. Intel reported $2.5 billion in operating profit from data center operations in fiscal Q2 2026, compared to $2.3 billion from PC chips despite lower revenue. The data center business retained 40 cents of operating profit per dollar of sales, whereas the PC chip business retained 26 cents. Despite these segment-level gains, Intel reported a net loss of $11.3 billion over the last twelve months, rendering price-to-earnings ratios less meaningful for valuation. On a sales basis, the stock trades at 10.7 times revenue, compared to 3.0 times for the S&P 500.
Investors face headwinds from rising costs and a weakening PC market. Management increased its 2026 capital spending outlook to more than $20 billion, with 2027 spending expected to be significantly higher. Concurrently, management expects PC consumption to be weak in the second half of the year and to decline by a low double-digit percentage for all of 2026.
Supply constraints represent a key risk to sustaining data center growth. Management stated that demand for Intel's products continues to outpace supply, with new supply weighted toward the end of fiscal Q3 2026 and into Q4, particularly for servers. For fiscal Q3 2026, Intel guided total revenue to a range of $15.8 billion to $16.8 billion. Since the company reported $16.1 billion in total revenue for fiscal Q2 2026, a result at or below that level would indicate no quarter-over-quarter growth across the entire company.
Competition from AMD remains a factor, with management acknowledging that Intel is still behind in some server market share areas but is catching up rapidly. The upcoming fiscal Q3 2026 report will be the next indicator of whether supply levels have kept pace with demand. Data center revenue at or below the $6.3 billion recorded in fiscal Q2 would signal a halt in quarter-over-quarter growth for that segment.