Intel’s Strong Chip Sales Highlight Benefits of Trump-Era Investments and AI Demand
Earlier this month, U.S. President Donald Trump boasted that the government made $70 billion on paper by acquiring about 10% of Intel’s stock during its challenging period in summer 2025. Intel’s shares have surged approximately 326% over the past year, reaching a market valuation exceeding half a billion dollars, the highest in its history, surpassing even its 1990s peak when it was the world’s largest chipmaker.
Intel recently reported robust sales of custom chips (XPU) tailored for other tech companies, with an annual recurring revenue of $2 billion, tripling the previous year’s quarter. Its foundry division, which manufactures chips for external clients, also exceeded expectations. Major deals with Tesla and SpaceX, along with rumored interest from Nvidia and expanded cooperation with Google, may have been influenced by government involvement, though this remains unconfirmed.
Intel’s custom chip business for cloud companies could reach $4 billion by year-end within a $100 billion market that includes competitors like Broadcom and Marvell. The company also offers advanced manufacturing and packaging services in U.S. facilities producing chips with technology smaller than 2 nanometers. Overall external manufacturing revenue hit $5.8 billion, surpassing forecasts and rising 6% year-over-year due to improved production yields of 1.8-nanometer chips under the 18A brand. Despite this, the foundry division remains unprofitable, with losses reduced to $730 million thanks to higher silicon wafer output and workforce reductions.
Intel continues investing billions to build and upgrade U.S. factories and its flagship plant in Ireland, which produces advanced chips. The Kiryat Gat facility in Israel, focused on "Intel 7" chips unrelated to foundry operations, awaits an upgrade likely delayed by Middle East instability.
Intel’s recent growth also stems from a 59% annual increase in standard processors, driven by the AI industry’s shift from training language models to running them cost-effectively. This has boosted demand for Intel’s Xeon server processors, which generated $6.3 billion in Q2 revenue with 40% operating margins and a $1 billion quarter-over-quarter operating profit increase. These processors, made in Israel, Ireland, and the U.S., account for about 70% of Intel’s revenue and a 70% year-over-year rise in AI-related activities.
Intel’s CFO David Zinsner highlighted that the company is now firmly riding the AI wave, marking its first major involvement in this revolution since the personal computing boom of the 1990s and early 2000s. Following the earnings report, Intel’s stock rose about 5% in after-hours trading on Nasdaq, recovering from a 2% drop earlier that day and a 24% decline over the past month amid a cooling chip sector. This contrasts with Alphabet’s recent report showing increased chip and server spending above $200 billion annually, underscoring growing commitments from software and cloud giants to chip purchases.
