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Data center profit exceeds Intel's whole operating income

DCAI earned $3.0B, 120.5% of Intel's $2.5B operating income, while Intel Foundry's $1.9B loss offset 61.0% of that data center profit.

Q3 FY2026, the quarter to Sep 26, 2026 · 10-Q filed Oct 30, 2026

Q3 FY2026 · revenue
$16.5B+20.9% on the year
Operating margin
15.3%
Net income
$3.3B
Free cash flow, quarter
$1.1B
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Key insights · Q3 FY2026
  1. 01

    Data center profit exceeds Intel's whole operating income

    DCAI earned $3.0B, 120.5% of Intel's $2.5B operating income, while Intel Foundry's $1.9B loss offset 61.0% of that data center profit.

    Why it matters

    Segment margins differ widely. Data Center and AI (DCAI) earned $3.0B of operating income on $7.3B of revenue, a 41.5% segment margin. The Client Computing and Physical AI Group (CCPG) earned $2.3B on $8.1B, a 28.2% margin. Intel Foundry lost $1.9B on $6.7B of revenue, a loss equal to 27.7% of its revenue.1

    Intel Foundry sells mainly to Intel itself: intersegment eliminations of $6.3B equal 93.9% of Foundry's $6.7B of revenue. The filing says the substantial majority of Intel's consolidated depreciation expense is incurred by Intel Foundry, so the factories carry the cost while the product segments carry the profit.1

    AnalysisAnalysis: the consolidated 15.3% operating margin is a blend of a profitable product business and a loss-making manufacturing business. Segment results depend on the internal prices Intel sets between its own units, so the split between product profit and Foundry loss is partly an accounting choice, while the total is not.

  2. 02

    Revenue rose 20.9% while operating expenses rose 0.9%

    With operating expenses nearly flat, a 20.9% revenue rise lifted operating income 269% to $2.5B and operating margin 10.27 points to 15.3%.

    Why it matters

    Net revenue rose to $16.5B from $13.7B a year earlier, while cost of sales rose 11.6% to $9.4B. Gross margin reached 43.0%, up 4.75 points from 38.2%. Operating expenses rose 0.9% to $4.57B: research and development grew 8.0% to $3.49B, marketing, general and administrative fell 8.8% to $1.03B, and restructuring charges fell to $54M from $175M.1

    The quarters show the lever at work. Operating income was a loss of $3.1B in Q1 FY2026, then $1.8B in Q2 FY2026 and $2.5B in Q3 FY2026, as quarterly revenue rose from $13.6B to $16.1B and then $16.5B.1

    The same lever cut the other way in the down cycle: revenue fell from $79.0B in FY2021 to $53.1B in FY2024, and operating income went from $19.5B to a loss of $11.7B.1

    AnalysisAnalysis: the filing figures do not separate how much of the margin gain came from more volume through fixed factory and research costs and how much from a richer mix of data center chips. The volume part reverses if revenue falls; the mix part holds only as long as data center demand does.

  3. 03

    Net income fell as operating income rose sharply

    Net income attributable to Intel fell 18.3% to $3.32B because interest and other, net dropped to $1.13B from $3.67B, which held the Altera gain.

    Why it matters

    Interest and other, net was 80.2% of income before taxes a year earlier and 28.4% now. A year earlier it held the pre-tax gain on the sale of a majority stake in Altera. This quarter it holds a gain on the mark-to-market of shares held in escrow for the U.S. Department of Commerce, which the filing says can swing in either direction from quarter to quarter.1

    The swing can be large. In Q2 FY2026 Intel reported operating income of $1.8B and a net loss of $11.0B. This quarter net income attributable to Intel of $3.32B sits above operating income of $2.5B, helped by $1.13B of interest and other and $330M of gains on equity investments.1

    AnalysisAnalysis: because the Escrowed Shares are marked to market, a rising Intel share price tends to produce a loss on this line and a falling one a gain. Operating income is the cleaner read of how the business itself performed.

  4. 04

    Operating cash now covers the factory building program

    Capital spending of $4.0B used 79.2% of $5.1B operating cash flow, leaving $1.06B of free cash flow after negative free cash flow every year from FY2022 to FY2025.

    Why it matters

    Free cash flow was $9.4B negative in FY2022, $14.3B negative in FY2023, $15.7B negative in FY2024 and $4.9B negative in FY2025, while capital spending peaked at $25.8B in FY2023 against operating cash flow of $11.5B.1

    This quarter operating cash flow rose to $5.1B from $2.5B a year earlier, and capital spending rose to $4.0B from $2.4B, equal to 24.4% of revenue. A year earlier capital spending took 95.2% of operating cash flow and free cash flow was $121M; this quarter it was $1.06B.1

    AnalysisAnalysis: quarterly cash flow is uneven. Free cash flow was negative $2.5B in Q1 FY2026 and positive $4.45B in Q2 FY2026, so the full-year pattern matters more than any one quarter.

Sources

  1. 1.Intel 10-Q for the period to 2026-09-26 (the filing), Oct 30, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $38.3B in FY2007 to $52.9B in FY2025, the operating margin from 21.4% to -4.2%, over 18 years.

  • Revenue$52.9B
  • Operating income-$2.2B
  • Operating margin-4.2%
Period
Q3 FY2026
Revenue
$16.5B
Operating income
$2.5B
Operating margin
15.3%
Net income
$3.3B
Free cash flow
$1.1B
Business performance

Does the profit turn into cash?

Q3 FY2026: free cash flow of $1.1B against net income of $3.3B in the quarter.

  • Operating cash flow$9.7B
  • Capital expenditure$14.6B
  • Free cash flow-$4.9B
  • Net income-$267.0M

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Operating Segments - Financial Information by Segment (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
43.0%
Source10-Q, Derived from Gross profit and Net revenue in the 10-Q filed 2026-10-30
Operating margin
15.3%
Source10-Q, Derived from Operating income (loss) and Net revenue in the 10-Q filed 2026-10-30
Net margin
20.1%
Source10-Q, Derived from Net income (loss) attributable to Intel and Net revenue in the 10-Q filed 2026-10-30
Free cash flow, quarter
$1.1B
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-30
Free cash flow margin, quarter
6.4%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-30
Cash conversion, quarter
1.53x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-30
Capital spending, quarter
24.4%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-30
Revenue growth
+20.9%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Segments

Ccpg$8.1B49.0%
Dcai$7.3B44.3%
Intel Foundry$6.7B40.6%
All Other$692.0M4.2%

These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30

ConsolidationItems

Operating segments$15.4B93.4%
Intersegment Eliminations-$6.3B-38.1%

These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ3 FY2026Of revenueSource
Cost of sales$9.4B57.0%Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-10-30
Operating income (loss)$2.5B15.3%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-30

Operating income by segment

Where the operating profit is earned, as the filing reports it.

Segments

Dcai$3.0B120.5%
Ccpg$2.3B90.6%
All Other$179.0M7.1%
Intel Foundry-$1.9B-73.5%

Shares of operating income. The segments do not sum to the total; the filing states them beside it. Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-30

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement19 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeOf revenueSource
Income Statement
Net revenue$16.51B$13.65B+21%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30
Cost of sales$9.42B$8.44B+12%57.0%Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-10-30
Gross profit$7.10B$5.22B+36%43.0%Source10-Q, us-gaap:GrossProfit, as reported in the 10-Q filed 2026-10-30
Research and development$3.49B$3.23B+8.0%21.1%Source10-Q, us-gaap:ResearchAndDevelopmentExpense, as reported in the 10-Q filed 2026-10-30
Marketing, general, and administrative$1.03B$1.13B-8.8%6.2%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-10-30
Restructuring and other charges$54.0M$175.0M-69%0.3%Source10-Q, us-gaap:RestructuringSettlementAndImpairmentProvisions, as reported in the 10-Q filed 2026-10-30
Operating expenses$4.57B$4.54B+0.9%27.7%Source10-Q, us-gaap:OperatingExpenses, as reported in the 10-Q filed 2026-10-30
Operating income (loss)$2.52B$683.0M+269%15.3%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-30
Gains (losses) on equity investments, net$330.0M$221.0M+49%2.0%Source10-Q, intc:GainsLossesOnEquityInvestments, as reported in the 10-Q filed 2026-10-30
Interest and other, net$1.13B$3.67B-69%6.8%Source10-Q, us-gaap:NonoperatingIncomeExpense, as reported in the 10-Q filed 2026-10-30
Income (loss) before taxes$3.98B$4.57B-13%24.1%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest, as reported in the 10-Q filed 2026-10-30
Provision for (benefit from) taxes$462.0M$304.0M+52%2.8%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-10-30
Net income (loss)$3.52B$4.27B-18%21.3%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-30
Less: net income (loss) attributable to non-controlling interests$200.0M$207.0M-3.4%1.2%Source10-Q, us-gaap:NetIncomeLossAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-30
Net income (loss) attributable to Intel$3.32B$4.06B-18%20.1%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-30
Earnings (loss) per share attributable to Intel—basic (in dollars per share)$1$1-30%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-10-30
Earnings (loss) per share attributable to Intel—diluted (in dollars per share)$1$1-33%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-10-30
Weighted average shares of common stock outstanding:
Basic (in shares)5,244,000,0004,514,000,000+16%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-10-30
Diluted (in shares)5,307,000,0004,531,000,000+17%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-10-30
Cash flow statement2 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ3 FY2026A year earlierChangeSource
Cash flows provided by (used for) operating activities:
Net income (loss)$3.52B$4.27B-18%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-30
Statement of Cash Flows
Cash, cash equivalents, and restricted cash, end of period$22.40B$11.14B+101%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations, as reported in the 10-Q filed 2026-10-30
Balance sheet26 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeSource
Current assets:
Cash and cash equivalents$21.85BSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-30
Short-term investments$32.16BSource10-Q, us-gaap:AvailableForSaleSecuritiesDebtSecuritiesCurrent, as reported in the 10-Q filed 2026-10-30
Accounts receivable, net$4.09BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-10-30
Inventories$13.07BSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-10-30
Other current assets$11.41BSource10-Q, us-gaap:OtherAssetsCurrent, as reported in the 10-Q filed 2026-10-30
Total current assets$82.57BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-10-30
Assets
Property, plant, and equipment, net of accumulated depreciation of $111,913 ($106,464 as of December 27, 2025)$105.31BSource10-Q, us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization, as reported in the 10-Q filed 2026-10-30
Equity investments$8.80BSource10-Q, intc:EquityInvestments, as reported in the 10-Q filed 2026-10-30
Goodwill$20.47BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-10-30
Identified intangible assets, net$2.44BSource10-Q, us-gaap:IntangibleAssetsNetExcludingGoodwill, as reported in the 10-Q filed 2026-10-30
Other long-term assets$8.98BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-10-30
Total assets$228.57BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-10-30
Current liabilities:
Accounts payable$8.83BSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-10-30
Accrued compensation and benefits$3.91BSource10-Q, us-gaap:EmployeeRelatedLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Short-term debt$3.82BSource10-Q, us-gaap:DebtCurrent, as reported in the 10-Q filed 2026-10-30
Other accrued liabilities$20.84BSource10-Q, us-gaap:OtherLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Total current liabilities$37.40BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Liabilities and stockholders’ equity
Debt$46.32BSource10-Q, us-gaap:LongTermDebtNoncurrent, as reported in the 10-Q filed 2026-10-30
Other long-term liabilities$13.31BSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-30
Stockholders’ equity:
Common stock and capital in excess of par value, 5,310 issued and outstanding (4,994 issued and outstanding as of December 27, 2025)$78.18BSource10-Q, us-gaap:CommonStocksIncludingAdditionalPaidInCapital, as reported in the 10-Q filed 2026-10-30
Accumulated other comprehensive income (loss)-$232.0MSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-10-30
Retained earnings$36.97BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-10-30
Total Intel stockholders' equity$114.91BSource10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-10-30
Liabilities and stockholders’ equity
Non-controlling interests$16.64B$10.35B+61%Source10-Q, us-gaap:MinorityInterest, as reported in the 10-Q filed 2026-10-30
Total stockholders' equity$131.56B$116.73B+13%Source10-Q, us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-30
Total liabilities and stockholders’ equity$228.57BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-10-30

About this data

Source
Intel 10-Q, accession 0000050863-26-000191, filed Oct 30, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds Intel's model up, and what could bend it

Competitive edge

  • Intel's own products give its factories a base load

    Sales to Intel's product segments equal 93.9% of Intel Foundry's $6.7B revenue, so the factories run on a large base of internal volume.

    The detail

    Intel Foundry reported $6.7B of revenue, and $6.3B of intersegment eliminations are removed in consolidation. Intel's product segments together brought in $15.4B of revenue, the demand that keeps the factories loaded.1

    AnalysisAnalysis: owning manufacturing gives Intel control over supply and process technology that chip designers who rely on outside foundries do not have, and the separate Foundry accounts make the true cost of that manufacturing visible. The advantage depends on the factories eventually earning their keep.

  • Data center chips earn a 41.5% segment margin

    DCAI's 41.5% margin against CCPG's 28.2% means every shift of output toward the data center raises Intel's overall profitability.

    The detail

    DCAI was 44.3% of net revenue at $7.3B and earned $3.0B of operating income. CCPG was 49.0% of net revenue at $8.1B and earned $2.3B.1

    AnalysisAnalysis: both product families come out of the same factories, so when capacity is tight the allocation between them is itself a margin decision. The filing lists the evolving AI market among its risk factors, so this edge rests on demand that Intel names as uncertain.1

What to watch

  • Intel Foundry still loses money serving mostly Intel

    Intel Foundry lost $1.9B, 27.7% of its revenue, and the filing names winning significant external customers as an open risk.

    The detail

    The filing's first risk is research, development and manufacturing investments "that may not realize a favorable return", together with its pursuit of next-generation leading-edge processes and the effort to win design commitments from significant external customers.1

    AnalysisAnalysis: with 93.9% of Foundry revenue coming from Intel itself, the loss narrows mainly through more internal volume or new outside customers. Without either, the factories keep absorbing a large part of the product segments' profit.

  • New shares cut earnings per share as profit rose

    Basic shares rose to 5.24 billion from 4.51 billion, so diluted earnings per share fell to $0.60 from $0.90.

    The detail

    The filing lists the sources of new shares: sales to SoftBank and NVIDIA, shares issued under the agreement with the U.S. government, and an underwritten public offering completed during the quarter. It names the U.S. government's acquisition of significant equity interests, alternative financing arrangements and access to capital among its risks.1

    AnalysisAnalysis: outside money closed the gap left by years of negative free cash flow, and existing shareholders bear that cost as a larger share count. It pays off for them only if the capacity it funded earns a return.

  • Substrate and memory shortages constrain the supply chain

    The filing names current industry-wide substrate and memory shortages, tariffs, export controls and several regional tensions as pressures on supply and sales.

    The detail

    The filing cites its supply chain, "including current industry-wide substrate and memory shortages", tariffs and export controls, and tensions involving the U.S. and China, China and Taiwan, Israel and the Middle East, and Russia and Ukraine.1

    AnalysisAnalysis: for a business whose margin rose with volume, a component shortage that limits shipments works through the same fixed-cost lever in reverse, even when demand is there.

Sources

  1. 1.Intel 10-Q for the period to 2026-09-26 (the filing), Oct 30, 2026, read Nov 2, 2026
Go deeper

Intel, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What Intel's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What Intel's new margin depends on from here

    How much of this quarter's gain came from volume through fixed costs and how much from data center mix, and what each needs to hold.

  • When does Intel Foundry stop absorbing product profit?

    The conditions under which the factory loss narrows: internal volume, outside customers and the cost of capacity, and the signs to read in each filing.

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Questions to start with
  • Why did Intel's net income attributable fall 18.3% while its operating income rose 269%?
  • What would outside customers need to bring for Intel Foundry's $1.9B quarterly loss to narrow?
  • How much of Intel's 4.75-point gross margin gain might reverse if data center supply eases or PC demand falls?

Business Lens describes Intel from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.