Intel just confirmed another round of job cuts. This time the ax falls on its data center and AI group. The very unit driving recent revenue gains. Shares jumped anyway.
The chipmaker told employees Tuesday it would trim headcount in the division responsible for Xeon server processors and custom AI accelerators. No exact number of positions eliminated. No change to product roadmaps or customer commitments, according to a person familiar with the matter. Bloomberg reported the details.
The data center and AI group posted $5.05 billion in first-quarter revenue. That’s up 22 percent from a year earlier. Demand for Xeon chips in AI servers fueled the increase. Yet efficiency remains the priority under CEO Lip-Bu Tan.
Turnaround Gains Mask Ongoing Pain
Tan took over in March 2025 after Pat Gelsinger’s ouster. He has slashed the workforce aggressively. Intel’s global headcount fell from more than 130,000 in 2022 to about 81,000 today. The company aims for roughly 75,000 by year-end. The Oregonian/OregonLive first broke the latest cuts.
These reductions follow more than 35,000 jobs eliminated since 2024. Earlier losses stemmed from weak performance in data center CPUs and foundry operations. Those units together lost $1.6 billion at one point. Now the data center group shows strength. And still faces restructuring.
Why cut now? The group is “aligning its organization to ensure it has the right roles and skills in place to position the business for long-term success,” Intel stated. Short answer. Focused. Tan views the fix as one of precision. Not expansion. Even as AI infrastructure spending explodes.
And the market agrees. Intel shares rose as much as 8 percent in early trading after the news. The stock has more than tripled from 2024 lows near $23. It sits above $96 recently. Investors cheer the discipline. They bet on 18A process technology hitting volume production. They count on foundry wins with Apple and Amazon. They see Xeon capturing more AI host-processor sockets.
But. Challenges linger. Intel has yet to deliver a competitive AI accelerator to challenge Nvidia’s GPUs. That gap has cost billions in potential sales. Meanwhile hyperscalers pair more CPUs with GPUs than before. Agentic AI drives fresh demand for high-core-count Xeons. Intel’s Clearwater Forest and upcoming chips target exactly that.
The pattern repeats industrywide. Meta, Oracle and others trim staff while pouring capital into AI. Efficiency first. Scale second. Tan warned of tough decisions early in his tenure. He delivers on that promise.
Intel reports second-quarter results Thursday. Wall Street will dissect data center numbers above all else. Revenue momentum looks solid. The question is sustainability. Has the rally priced in too much progress? Or does the stock reflect real manufacturing and design momentum?
The U.S. government holds roughly a 10 percent stake through converted CHIPS Act funds. That position gained enormously with the share price surge. Success here carries national implications for semiconductor resilience.
Recent coverage adds context. Tom’s Hardware noted the cuts target server CPUs, AI chips and data center architecture. Production remains unaffected. CRN highlighted the timing ahead of earnings amid pent-up AI demand. Business Insider via Yahoo Finance quoted the realignment language directly.
Tan’s approach prioritizes margins and focus. He canceled projects in Europe. Slowed U.S. factory builds. The data center moves fit the script. Short-term disruption for longer-term agility. Employees feel the sting. Shareholders see the upside. The industry watches closely.
Intel’s Xeon platform now anchors many AI systems. Nvidia’s Vera Rubin uses it as host. Custom chips for hyperscalers remain in play. The 18A node draws inbound interest from potential foundry customers. Yields improve faster than expected on newer processes. Those positives underpin the rally.
Still the layoffs continue. The data center group isn’t immune. Its success buys time but not immunity. Tan streamlines even winning units. He wants the right mix of talent. Not just more bodies. That bet will face its test in coming quarters. As AI compute demand accelerates. As competition from AMD, Broadcom and custom silicon intensifies.
One thing is clear. Intel’s recovery isn’t linear. It mixes progress with pruning. Revenue growth in key areas. Headcount reduction across the board. Stock gains that outpace fundamentals so far. The earnings call will reveal whether that formula holds.
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