Analyst(s): Richard Gordon, Daniel Newman
Publication Date: April 29, 2025
Intel’s Q1 FY 2025 earnings report highlights how the company maintained flat revenue while navigating ongoing margin pressure and slower profitability. The update reflects early signs of strategic restructuring under new CEO Lip-Bu Tan, though near-term financial results remain challenged by weak product performance and high costs.
What is Covered in this Article:
- Intel’s Q1 FY 2025 financial results
- Client Computing Group performance and AI PC focus
- Data Center and AI segment growth and challenges
- Foundry revenue growth and 18A ramp update
- Cost cuts, restructuring, and turnaround strategy
The News: Intel Corp. (NASDAQ: INTC) reported its Q1 FY 2025 financial results, with revenue of $12.7 billion (+3% above consensus estimates), flat year-on-year (YoY). By business segment, Client Computing Group (CCG) revenue declined 8% YoY to $7.6 billion. Data Center and AI (DCAI) grew 8% YoY to $4.1 billion. Total Intel Products revenue was $11.8 billion, down 3% YoY. Intel Foundry revenue rose 7% YoY to $4.7 billion, while All Other revenue surged 47% YoY to $0.9 billion. Non-GAAP gross margin stood at 39.2%, down 590 basis points YoY. Non-GAAP operating income was $690 million, reflecting a 4.6% YoY decline. The corresponding margin contracted to 5.4% from 5.7% in Q1 FY 2024. Non-GAAP net income dropped 23.6% YoY to $580 million. Non-GAAP diluted earnings per share (EPS) were $0.13 (significantly above consensus), down from $0.18 in Q1 FY 2024.
“The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,” said Lip-Bu Tan, CEO of Intel. “I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. We are going back to basics by listening to our customers and making the changes needed to build the new Intel.”
Intel Delivers Flat Q1 FY 2025 Revenue Amid Ongoing Turnaround Efforts
Analyst Take: Intel’s Q1 FY 2025 results reflect incremental progress on execution, tempered by persistent headwinds in profitability and competitiveness. While revenue exceeded expectations, margin pressure and a weak product mix continue to weigh on the bottom line. CEO Lip-Bu Tan’s first full quarter introduced a pragmatic reset—focusing on execution discipline, cost control, and cultural simplification—with early signals of tighter alignment between product, engineering, and customer needs.
Client Computing Trends Reflect Raptor Lake Strength
Client Computing Group (CCG) revenue declined 8% YoY to $7.6 billion. Management cited higher-than-expected volumes, particularly for Raptor Lake, though the benefit was offset by product mix and competitive pricing pressure. Management noted that volume skewed toward Raptor Lake due to stronger-than-anticipated demand, while OEMs continued prioritizing N-1 and N-2 platforms to maintain system-level affordability. CEO Lip-Bu Tan reaffirmed the strategic focus on execution and product delivery, with Panther Lake ramping by year-end and additional SKUs expected in H1 FY 2026. Intel reiterated its commitment to AI PCs, referencing strong customer enthusiasm with software vendors. While macroeconomic uncertainty remains a headwind, Intel expects its refreshed client portfolio and execution-focused culture to drive gradual momentum across the PC segment.
DCAI Grows, But Competitive Landscape Still Constrains Upside
Data Center and AI Group (DCAI) revenue rose 8% YoY to $4.1 billion, driven by increased Xeon volume and stronger-than-expected demand from a few hyperscalers. Intel highlighted customer interest in Granite Rapids and Xeon 6, with potential for consolidation and edge AI use cases. Demand for older-generation products remained strong, and Intel is working through associated supply constraints. Clearwater Forest remains scheduled for H1 FY 2026. The company reaffirmed the shift away from Falcon Shores, with Jaguar Shores positioned as the rack-level architecture moving forward. While Intel remains focused on regaining share in the data center CPU market, competitive headwinds and macro uncertainty continue to weigh on near-term visibility.
Foundry Grows on Internal Demand, Losses Remain Elevated
Intel Foundry revenue increased 7% YoY to $4.7 billion, driven by internal wafer shipments and higher demand for advanced packaging services. The business reported an operating loss of $2.3 billion, flat sequentially, reflecting structural cost pressures and startup expenses tied to the ramp of Intel 18A. Management reiterated that 18A remains on track for volume production in H2 FY 2025, supporting the rollout of Panther Lake SKUs. CEO Lip-Bu Tan stressed that successful execution in the foundry hinges on yield improvements, customer service orientation, and broader adoption of standard EDA tools. Development of 14A is underway in collaboration with customers, with Tan emphasizing roadmap discipline and reliability as priorities. While Intel continues investing in its foundry capabilities, external foundry customer traction remains limited, and structural improvements will likely take time.
Cost Cuts and Operational Restructuring Take Center Stage
Intel’s turnaround plan under new CEO Lip-Bu Tan was clearly outlined during the quarter. Management emphasized the need to reduce bureaucracy, flatten organizational layers, and empower engineering teams to drive faster execution. Intel lowered its FY25 non-GAAP operating expense target to approximately $17 billion, down from the previously guided $17.5 billion, and set a new FY26 target of $16 billion. Gross capital expenditure guidance was cut to $18 billion from $20 billion while maintaining net capital expenditure between $8–11 billion. Tan also announced a mandate for employees to return to offices four days a week starting September 1, aiming to foster greater collaboration and efficiency. Additionally, Intel confirmed plans to monetize non-core assets, highlighted by the announced sale of a 51% stake in Altera. Management reiterated that the turnaround will not be quick, with Tan stressing that fundamental cultural and operational changes are underway to stabilize performance and restore long-term competitiveness.
Guidance and Final Thoughts
Intel guided Q2 FY 2025 revenue between $11.2 billion and $12.4 billion, with non-GAAP gross margin expected at 36.5% and non-GAAP EPS at $0.00. Management cautioned that Q1 strength partly reflected pull-ins ahead of tariffs, masking underlying demand weakness.
On a non-GAAP basis, Intel delivered flat YoY revenue with lower margins and EPS, which should surprise no one. The positives – revenue, gross margin, and EPS – came in above guidance, representing tangible ‘progress.’ CEO Lip-Bu Tan outlined a turnaround strategy centered on tighter OpEx and CapEx discipline, sharpening focus on core businesses, and building execution strength, especially around AI and manufacturing. He was clear that there are no quick fixes, with success hinging on making Intel Foundry sustainably profitable and delivering 18A for both internal and external customers. Investors must focus less on short-term quarters and more on Intel’s ability to execute through H2 FY 2025 and beyond. Tan aims to instill a Broadcom-style operational rigor that will demand patience but could restore Intel’s standing as a key U.S. chip manufacturing leader.
See the complete press release on Intel’s fiscal Q1 FY 2025 financial results on the Intel website.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Intel Vision 2025: Why Physical AI Beckons for Intel
Can Lip-Bu Tan’s Engineering-First Vision Get Intel Back on Track?
Can Intel’s Panther Lake and 18A Process Reset the Chipmaker’s Competitive Position?
Author Information
Richard Gordon is Vice President & Practice Lead, Semiconductors for The Futurum Group. He has been involved in the semiconductor industry for more than 30 years, first in engineering and then in technology and market research, industry analysis, and business advisory.
For many years, Richard led Gartner's Semiconductor and Electronics practice, building a 20-person global team covering all aspects of semiconductor industry research, from manufacturing to chip markets and end applications. Having served on Gartner's Senior Research Board and as Gartner's Chief Forecaster, Richard has extensive experience in developing and implementing methodologies for market sizing, share and forecasting, to deliver data, analysis and insights about the competitive landscape, technology roadmaps, and market growth drivers.
Richard is a sought-after technology industry analyst, both as a trusted advisor to clients and also as an expert commentator speaking at industry events and appearing on live TV shows such as CNBC.
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
