Intel Job Cuts Reported Ahead of Earnings: Why AI Recovery Still Can’t Stop Data Center Unit From Shrinking Again?

TradingKey - Ahead of its upcoming fiscal second-quarter 2026 earnings release, Intel ( INTC) has once again initiated organizational restructuring.

According to multiple media reports, Intel has notified employees in its Data Center & AI Group (DCG) that the company will implement a new round of layoffs.

However, the company did not disclose the specific number of affected employees, stating only that this adjustment is part of its overall restructuring plan and will not affect its established product roadmap and customer delivery schedules.

This marks the third consecutive year that Intel has pushed forward with large-scale workforce reductions, reflecting that, against the backdrop of the AI wave reigniting market expectations, the legacy chip giant continues to drive internal reforms, hoping to enhance its competitiveness through a leaner organizational structure.

Data Center Business Recovers, Why Continue Layoffs?

The target of these layoffs is precisely Intel's data center business, which has shown significant improvement in recent quarters.

In the first quarter of this year, the Data Center and AI business generated approximately $5.1 billion in revenue, up 22% year-over-year, making it one of the company's few business segments to maintain rapid growth. As demand for AI training, inference, and enterprise servers continues to increase, the market generally expects this division to remain an important growth engine for Intel in the coming years.

However, despite the recovery in business, management has not slowed the pace of reform.

Intel stated that this organizational adjustment aims to optimize job structures and skill allocation, enabling teams to focus more on key businesses, while reducing management layers to improve decision-making efficiency and product execution speed. The company emphasized that the restructuring will not alter existing product plans or affect future technology roadmaps, but rather aims to support long-term growth through a leaner operating model.

For Intel, which has just completed its management adjustments, improving organizational efficiency has become one of its most important tasks at present.

Chief Executive Officer Lip-Bu Tan has previously stated on multiple occasions that the company's past organizational structure was too complex, with redundant layers slowing down product development and decision-making efficiency, and that it will continue to promote flat management in the future to enable R&D, manufacturing, and marketing to respond more quickly to industry changes.

In fact, the layoffs are only the latest step in Intel's ongoing downsizing plan.

Over the past few years, the company has undergone its largest round of organizational restructuring in recent years. Since 2022, Intel's global workforce has decreased from approximately 132,000 to about 81,000, representing a cumulative reduction of nearly 40%

Market Bets on Intel Again

Despite ongoing layoffs, capital market expectations for Intel have improved significantly.

Over the past year, the company's stock price has gained over 300% cumulatively, at one point rising from about $23 to near $142. Although it has pulled back recently, it remains well above the level of the same period last year.

A key driver of this valuation recovery is the market's renewed optimism regarding Intel's growth opportunities in the AI era.

On the one hand, with the rapid growth in demand for AI servers, the market expects enterprise CPU demand to gradually recover. On the other hand, there is widespread expectation that large tech companies like Apple may outsource some chip manufacturing orders to Intel's foundry in the future, further bolstering the development prospects of its wafer foundry business.

Meanwhile, Intel is continuing to increase investments in AI processors, advanced packaging, and foundry manufacturing, hoping to leverage the wave of AI infrastructure construction to regain the competitive initiative.

Market Focuses on Whether Performance Can Be Delivered Ahead of Earnings

According to market expectations, Intel will report its second-quarter 2026 financial results after the U.S. market close on July 23.

Analysts expect the company's revenue for the quarter to be approximately $14.45 billion, with adjusted earnings per share of about $0.22, a significant improvement from the loss of $0.10 per share in the same period last year. If the final results meet or even exceed market expectations, it will further validate that the company's operating condition is gradually recovering.

Compared to quarterly performance, investors are paying closer attention to management's latest assessment of AI server demand in the second half of the year, progress in the foundry business, and future cost control plans.

The layoffs in the data center division also mean that Intel's reform has entered a new stage. Moving from consecutive years of large-scale headcount reductions to today's more precise organizational optimization for core businesses, the company's strategic focus has gradually shifted from mere cost reduction to improving operational efficiency and resource allocation capabilities.

For Intel, the industry opportunities brought by AI are reopening room for growth, but whether it can truly achieve a revival through organizational reshaping and product upgrades remains to be verified by its financial performance over the coming quarters.