AI PCs: Two-Thirds of Client RevenueNarrow moat

Intel (INTC) — moat facet

Two thirds of Intel's PC revenue now comes from AI PCs, a product cycle that helps whoever makes the better chip.

Intel's defence of the PC franchise is a new generation of processors sold as AI PCs, able to run AI models on the machine itself. In the second quarter of 2026 about two thirds of Intel's client revenue came from AI PCs, and its Core Ultra Series 3 had been designed into more than 400 machines1. Client revenue was $7.7 billion in the quarter, with average selling prices up 27% and volume down 8%2.

Client revenue ($bn)28.7Notebook and desktop 202427.6Notebook and desktop 20254.6Other client 2025Intel Form 10-K FY2025; other client roughly flat
The PC business shrank slightly in 2025.

The transition is also a manufacturing story. Intel's older client chips, made on its Intel 7 process, represented almost half of Client Computing product sales by revenue in 2025, a share Intel expects to decrease significantly in 2026 as Core Ultra sales increase3. The newest chips are built on Intel 18A, and management said it cut the cost of its primary Panther Lake product by roughly 50 percent in 20264.

For the year the client business is not growing. Client revenue, notebooks and desktops together, was $27.6 billion in 2025, down $1.1 billion, and other Client Computing revenue was $4.6 billion, roughly flat5. The gain in the latest quarter came from price.

The AI PC is a reason for businesses to replace machines and a reason for customers to pay more. It is not exclusive: AMD sells AI PCs, and Apple and Qualcomm sell Arm-based machines with the same pitch, as Intel's own 10-K acknowledges by naming them as competitors6.

The new chips also depend on Intel's newest factories. Panther Lake is built on Intel 18A7, so the AI PC cycle doubles as the first large-scale test of whether Intel's own leading-edge process can make chips cheaply enough. The 50% cost reduction management reported8 is the best evidence so far that it can.

A new product cycle helps whoever has the better chip. Intel's share of x86 notebooks is the number that will judge this one: AMD reached 28.9% in the second quarter of 2026, up 8.4 points in a year9, and a reversal of that gain would say the AI PC is working for Intel rather than for the category.

Moat trajectory: Holding steady

The new chips dominate the mix; client revenue fell slightly in 2025 and rose on price in 2026.

The number that tests this moat
Reported
Client revenue, latest quarter
$7.7bn (Q2 2026): prices +27%, volume -8%

The PC business under the AI PC transition; volume returning to growth would mean the new chips are winning share, not just raising prices.

Source: Intel Form 10-Q, Q2 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
Memory Prices Shrink the PC Market
Rising memory prices make PCs more expensive and fewer, and Intel's client business shrinks with them.
References
  1. ReportedIn the second quarter of 2026 about two thirds of Intel's client revenue came from AI PCs, and its Core Ultra Series 3 had been designed into more than 400 machines.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  2. ReportedClient revenue was $7.7 billion in the quarter, with average selling prices up 27% and volume down 8%.
    Intel Form 10-Q for the quarter ended 27 June 2026 - segments, the Ireland SCIP repurchase, escrowed shares, Intel 14A, customer deposits and debt. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedIntel's older client chips, made on its Intel 7 process, represented almost half of Client Computing product sales by revenue in 2025, a share Intel expects to decrease significantly in 2026 as Core Ultra sales increase.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  4. ReportedThe newest chips are built on Intel 18A, and management said it cut the cost of its primary Panther Lake product by roughly 50 percent in 2026.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  5. ReportedClient revenue, notebooks and desktops together, was $27.6 billion in 2025, down $1.1 billion, and other Client Computing revenue was $4.6 billion, roughly flat.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 7 MD&A and Note 3: segment revenue, operating income and drivers. — FY2025 · publ. 23 January 2026 · source ↗
  6. ReportedIt is not exclusive: AMD sells AI PCs, and Apple and Qualcomm sell Arm-based machines with the same pitch, as Intel's own 10-K acknowledges by naming them as competitors.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  7. ReportedPanther Lake is built on Intel 18A, so the AI PC cycle doubles as the first large-scale test of whether Intel's own leading-edge process can make chips cheaply enough.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  8. ReportedThe 50% cost reduction management reported is the best evidence so far that it can.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  9. Third-party estimateIntel's share of x86 notebooks is the number that will judge this one: AMD reached 28.9% in the second quarter of 2026, up 8.4 points in a year, and a reversal of that gain would say the AI PC is working for Intel rather than for the category.
    Basic Tutorials, Mercury Research Q2 2026 client shares: AMD 30.3% of x86 client CPUs, 34.9% of desktop and 28.9% of notebook. — Q2 2026 · publ. August 2026 · source ↗
Sources
Generated September 25, 2026