Nobody's in a rush to spend more on Intel’s AI chips when Raptor Lake does the job for less. During its grim earnings call, Chipzilla revealed that demand for “N-1 and N-2” parts—industry speak for last-gen gear—is sky-high, pushing its ageing ‘Intel 7’ fabs to breaking point.
Intel client division general manager Michelle Johnston Holthaus tried to spin it as a win for consumer pragmatism.
“What we're really seeing is much greater demand from our customers for n-1 and n-2 products so that they can continue to deliver system price points that consumers are really demanding. As we've all talked about, the macroeconomic concerns and tariffs have everybody kind of hedging their bets and what they need to have from an inventory perspective. And Raptor Lake is a great part. Meteor Lake and Lunar Lake are great as well, but come with a much higher cost structure, not only for us, but at the system ASP price points for our OEMs as well.”
Bernstein Research analyst Stacy Rasgon pressed Holthaus about what this bodes for Panther Lake, set to land at the end of the year, especially given that tariff disruptions haven’t even hit yet.
Holthaus insisted the Panther Lake launch is “on track” and said Intel expects commercial uptake to lead the charge before consumers follow. She didn’t comment on whether anyone actually wants AI in their laptop outside of marketing departments.
espite beating revenue and EPS expectations for the quarter ending 31 March 2025, Intel’s guidance for Q2 sent investors running—stock slumped 7 per cent in after-hours trading, and mass layoffs are now officially on the cards.
Intel reported $12.667 billion in non-GAAP revenue, edging past Wall Street’s $12.32 billion guess. Non-GAAP EPS clocked in at $0.13, smashing the meagre $0.01 consensus. Gross margin also surprised at 39.2 per cent, well above the company’s own 36 per cent forecast.
But Bernstein Research analyst Stacy Rasgon warned the quarter’s strength may be illusory. “It’s eminently possible that Intel benefited from a tariff-driven pull-forward of demand,” Rasgon said in a note today. He also cautioned about a likely “channel flush” in the second half of 2025 as retailers burn through swollen inventories.
Rasgon was not happy with Intel’s floundering AI strategy. The Gaudi platform continues to flop, Falcon Shores has been binned, and “the company still has no real response to the AI/GPU threat,” he said.
Intel’s Data Center and AI (DCAI) group pulled in $4.1 billion in Q1—well above the $2.9 billion expected—while the Client Computing Group (CCG) did $7.6 billion versus a $6.9 billion estimate. Solid numbers, but the Q2 forecast paints a grim picture: just $11.8 billion in revenue expected at the midpoint, against a $12.8 billion analyst consensus. EPS guidance is also dire at $0.06, well below expectations.
The company is now targeting $17 billion in operating expenses for 2025 (down from $17.5 billion), and hopes to slice that to $16 billion in 2026. Gross capital expenditure is also being cut from $20 billion to $18 billion, with net capex expected to land somewhere between $8 billion and $11 billion.
But the biggest cut is still warming up: layoffs are finally on the horizon. Intel chief executive Lip Bu-Tan has confirmed job culls will begin in Q2, following 30,000 positions axed in the last two years.
Bu-Tan added: “Many teams are eight or more layers deep, which creates unnecessary bureaucracy that slows us down. The most important KPI for many managers has been the size of their teams. Going forward, this will not be the case.”
Bu-Tan also announced a new mandate: four days a week on-site by 1 September, and far fewer pointless meetings. “Too much valuable time is being wasted,” he said.
So yes, Q1 wasn’t a total disaster—but with guidance in the gutter, layoffs looming, and no killer AI pitch in sight, Chipzilla’s problems are stacking up faster than its unsold Lunar Lake laptops.
Investors weren’t impressed. With revenue from Chipzilla’s Client Computing Group down eight per cent year-on-year, the company’s stock took a tumble and Intel chief executive Pat Gelsinger confirmed layoffs are looming.
Despite all the AI bluster, there's still no killer app nudging consumers to fork out for a new PC. Most of the shiny features are background fluff—AI nudges in Office and Photoshop rather than anything truly jaw-dropping.
With AMD’s earnings due in 10 days and CPU market share numbers dropping soon after, it’s looking like Chipzilla might want to keep the Raptor Lake presses hot—and hope the AI PC pitch doesn’t turn into another Itanium.
