TL;DR
Intel is cutting more jobs at its data center division as Lip-Bu Tan continues to reshape the company, with shares up nearly 8 percent two days before earnings.
Intel confirmed on Tuesday that it will cut an unspecified number of jobs in its data center group, which is responsible for Xeon server processors and artificial intelligence-related hardware, as part of a broader restructuring under CEO Lip-Bu Tan. Shares rose as much as 8 percent in early trade, extending a rally that has seen shares more than double this year. The layoffs come two days before Intel reports second-quarter earnings on Thursday.
Company data center group’s “align its organization to ensure it has the right roles and skills to position the business for long-term success,” without specifying how many positions will be eliminated. A person familiar with the matter told Bloomberg that the changes will not affect the division’s product commitments or roadmaps. The data center and artificial intelligence division posted revenue of $5 billion last quarter, up 22 percent year over year, driven by increased demand for Xeon processors used in artificial intelligence data centers.
This revenue growth highlights the paradox at the heart of the cuts. Intel is cutting headcount in the same business unit that has fueled its financial recovery, a sign that Tan views the turnaround as a matter of efficiency rather than scale. The Xeon line has found an increasing role as the main processor in AI systems, including Nvidia’s own Vera Rubin platform, but Intel has yet to produce a competitive AI accelerator chip to rival Nvidia’s GPUs, a failure that has cost it billions in revenue.
Tan, who replaced the ousted Pat Gelsinger in March 2025, after taking over, it cut tens of thousands of jobs. Intel ended last quarter with about 83,200 employees, down from a peak of about 132,000 in 2022, and the company said it expects to end the year with about 75,000. The layoffs are part of a pattern across the tech industry, where companies from Meta to Oracle are cutting staff while increasing spending on AI infrastructure.
The US government owns a 10 percent stake in Intel a position worth tens of billions after a stock raise under Tan, acquired through converted CHIPS Act grants. The shift was driven by Intel’s 18A manufacturing process reaching high volume production, foundry partnerships with Apple and Amazon, and the Xeon business capturing demand from AI data center builds.
Intel reports earnings on Thursday after the market close, and the data center group’s results will be the most closely watched number for investors. The question is whether the earnings trajectory justifies a stock that has more than tripled from its 2024 lows, or whether the market has already priced in more upside than key support.
