Intel has announced additional layoffs within its data center division while the stock rises due to signs of a turnaround.
Intel is reducing its workforce in the data center unit as CEO Lip-Bu Tan continues to reorganize the company, with shares rising nearly 8 percent just two days before the earnings report. On Tuesday, Intel announced the layoffs in its data center division, which focuses on Xeon server processors and AI-related technology, as part of a broader restructuring. The stock experienced an increase of up to 8 percent in early trading, extending a year-to-date rally that has seen the shares more than double. These job cuts come ahead of Intel's second-quarter earnings release scheduled for Thursday.
The company stated that the data center group is "aligning its organization to ensure it has the right roles and skills in place to position the business for long-term success," though it did not disclose how many jobs would be affected. A source informed Bloomberg that these changes would not alter the product commitments or roadmaps within the unit. Last quarter, the data center and AI division generated $5 billion in revenue, marking a 22 percent increase year over year, driven by the growing demand for Xeon processors in AI data centers.
This revenue growth underscores a contradiction at the heart of the layoffs. Intel is cutting jobs in the very business unit that is fueling its financial recovery, suggesting that Tan prioritizes efficiency over scale in the turnaround process. While the Xeon line has increasingly served as the main processor in AI systems, including Nvidia's own Vera Rubin platform, Intel has yet to develop a competitive AI accelerator chip to rival Nvidia’s GPUs, a shortfall that has cost the company billions in potential revenue.
Since taking over from the ousted Pat Gelsinger in March 2025, Tan has implemented significant job cuts, reducing Intel's workforce from a peak of nearly 132,000 in 2022 to about 83,200 at the end of the last quarter, with expectations of finishing the year with around 75,000 employees. This trend of layoffs mirrors a broader pattern across the tech industry, where companies like Meta and Oracle have also laid off workers while ramping up investments in AI infrastructure.
The U.S. government owns a 10 percent stake in Intel gained through CHIPS Act grants, a holding that has significantly appreciated with the stock surge under Tan’s leadership, now valued at tens of billions. This turnaround has been fueled by the high-volume production of Intel's 18A manufacturing process, foundry partnerships with Apple and Amazon, and the Xeon business capitalizing on the demand generated by the AI data center expansion.
Intel will report its earnings after the market closes on Thursday, and the performance of the data center group is expected to be of particular interest to investors. The critical issue will be whether the revenue growth justifies a stock price that has more than tripled from its lows in 2024, or if the market has already accounted for more progress than the underlying fundamentals can support.
Published July 21, 2026 - 8:20 pm UTC
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Intel has announced additional layoffs within its data center division while the stock rises due to signs of a turnaround.
Intel is reducing its workforce in the data center division as CEO Lip-Bu Tan reorganizes the company, with shares rising almost 8 percent following the announcement, just two days ahead of earnings.