Servers: Share Down, Prices Up 48%Narrow moat

Intel (INTC) — moat facet

Intel's server business earns eight times what it did in 2023 on a smaller share of the market, because everyone is short of server chips.

The data center is where Intel's franchise has lost most and recovered most, in the same eighteen months. By units, Mercury Research put Intel at 65.5% of server processors in the second quarter of 2026 and AMD at 34.5%1. By revenue AMD had reached 46.2% of x86 server processor sales in the first quarter2, which means Intel's remaining share is concentrated in cheaper chips.

Data Center and AI operating income ($M)94520231,41420243,4222025633Q2 20252,474Q2 2026Intel Form 10-K FY2025; Q2 2026 results release
One quarter now earns most of what 2025 earned.

Yet the segment's profits have never looked better. Data Center and AI revenue was $6,262 million in the second quarter of 2026, up from $3,939 million a year earlier3, and operating income was $2,474 million, 40 percent of revenue4. For all of 2025 the segment earned $3,422 million on $16,919 million5, and in 2023 just $945 million on $15,980 million6.

The reason is price. Server average selling prices rose 48% in the second quarter against volume up 9%7. The industry is short of general-purpose processors to run alongside AI accelerators, and Intel's customers are paying up for whatever it can make.

Intel also sells the host processor in some of the most important AI systems: its Xeon 6 is the host CPU for Nvidia's DGX Rubin NVL88. That is a real advantage; it is also a supporting role in systems where Nvidia takes most of the money.

The data center business also used to be much larger. On the old structure Intel's data center group sold $26,103 million in 2020 and earned $10,571 million9; in 2021 revenue was $25,821 million and operating income $6,997 million10. The current segment, $16,919 million of revenue in 202511, is the franchise after AMD took a third of the units and nearly half of the revenue.

Prices can fall as fast as they rose. The number to follow is the Data Center and AI operating margin, 40% in the second quarter of 202612 against about 5.9% in 202313; a return below 20% once supply catches up would say the recovery was the shortage, not the franchise.

Moat trajectory: Holding steady

Share keeps falling while prices and margins rise on a supply shortage.

The number that tests this moat
Reported
Data Center and AI operating margin, latest quarter
40% (Q2 2026; $2,474M on $6,262M)

Pricing power in a shortage; a return below 20% after supply catches up would mean the recovery was temporary.

Source: Intel Q2 2026 prepared remarks ↗
⚠ Threats to the moat
⚠ THREAT 01
AMD Has Nearly Half of Server Revenue
By the value of chips sold, AMD now has nearly half of the x86 server market.
References
  1. Third-party estimateBy units, Mercury Research put Intel at 65.5% of server processors in the second quarter of 2026 and AMD at 34.5%.
    HotHardware, Mercury Research Q2 2026: AMD 34.5% of server CPU units, Intel 65.5%. — Q2 2026 · publ. August 2026 · source ↗
  2. Third-party estimateBy revenue AMD had reached 46.2% of x86 server processor sales in the first quarter, which means Intel's remaining share is concentrated in cheaper chips.
    Tom's Hardware, Mercury Research Q1 2026: AMD at 46.2% of x86 server CPU revenue and 38.1% of all x86 CPU market value. — Q1 2026 · publ. 14 May 2026 · source ↗
  3. ReportedData Center and AI revenue was $6,262 million in the second quarter of 2026, up from $3,939 million a year earlier, and operating income was $2,474 million, 40 percent of revenue.
    Intel second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 23 July 2026 · source ↗
  4. ReportedData Center and AI revenue was $6,262 million in the second quarter of 2026, up from $3,939 million a year earlier, and operating income was $2,474 million, 40 percent of revenue.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  5. ReportedFor all of 2025 the segment earned $3,422 million on $16,919 million, and in 2023 just $945 million on $15,980 million.
    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. ReportedFor all of 2025 the segment earned $3,422 million on $16,919 million, and in 2023 just $945 million on $15,980 million.
    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 ↗
  7. ReportedServer average selling prices rose 48% in the second quarter against volume up 9%.
    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 ↗
  8. ReportedIntel also sells the host processor in some of the most important AI systems: its Xeon 6 is the host CPU for Nvidia's DGX Rubin NVL8.
    Intel first-quarter 2026 results release, Form 8-K exhibit 99.1. — Q1 2026 · publ. 23 April 2026 · source ↗
  9. ReportedOn the old structure Intel's data center group sold $26,103 million in 2020 and earned $10,571 million; in 2021 revenue was $25,821 million and operating income $6,997 million.
    Intel Form 10-K for fiscal 2021 - segment results for 2019-2021 on the old structure. — FY2021 · publ. January 2022 · source ↗
  10. ReportedOn the old structure Intel's data center group sold $26,103 million in 2020 and earned $10,571 million; in 2021 revenue was $25,821 million and operating income $6,997 million.
    Intel Form 10-K for fiscal 2021 - segment results for 2019-2021 on the old structure. — FY2021 · publ. January 2022 · source ↗
  11. ReportedThe current segment, $16,919 million of revenue in 2025, is the franchise after AMD took a third of the units and nearly half of the revenue.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 7 MD&A and Note 3: segment revenue, operating income and drivers. — FY2025 · publ. 23 January 2026 · source ↗
  12. ReportedThe number to follow is the Data Center and AI operating margin, 40% in the second quarter of 2026 against about 5.9% in 2023; a return below 20% once supply catches up would say the recovery was the shortage, not the franchise.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  13. Moat Explorer calcThe number to follow is the Data Center and AI operating margin, 40% in the second quarter of 2026 against about 5.9% in 2023; a return below 20% once supply catches up would say the recovery was the shortage, not the franchise.
    Moat Explorer calculation from Intel's reported figures ($ millions unless stated). Segment margins 2025: Client Computing 9,317 / 32,228 = 28.9% (2024: 11,594 / 33,346 = 34.8%; Q2 2026: 2,343 / 8,877 = 26.4%); Data Center and AI 945 / 15,980 = 5.9% (2023), 1,414 / 16,125 = 8.8% (2024), 3,422 / 16,919 = 20.2% (2025), 2,474 / 6,262 = 39.5% (Q2 2026); Intel Products 12,739 / 49,147 = 25.9%. Revenue shares 2025: client 32,228 / 52,853 = 61.0%; data center 16,919 / 52,853 = 32.0%; together 49,147 / 52,853 = 93.0%. Client growth Q2 2026: 8,877 / 7,871 - 1 = 12.8%. Foundry: internal revenue 17,826 - 307 = 17,519, 17,519 / 17,826 = 98.3%; external share 307 / 17,826 = 1.7%; operating losses 7,083 + 13,291 + 10,318 = 30,692. Intel share of x86 server revenue Q1 2026: 100 - 46.2 = 53.8%. Revenue 2025 against 2021: 52,853 / 79,024 - 1 = -33.1%. Headcount 82.3 / 124.8 - 1 = -34%. Government stake 433.3M x $127.39 = about 55.2 bn; purchase funds 5.7 + 3.2 = 8.9 bn. Warrants 241M x (127.39 - 20.00) = about 25.9 bn. Nvidia stake 215M x 127.39 = about 27.4 bn; 215 / 4,994 = 4.3%. Backers 11.0 + 8.9 + 5.0 + 2.0 = 26.9 bn. Apollo 14.2 - 11.0 = 3.2 bn. Mobileye 100% - 23% = 77%. Net debt end-2025: (2,499 + 44,086) - (14,265 + 23,151) = 46,585 - 37,416 = 9,169; 27 June 2026: (1,988 + 48,549) - (12,874 + 16,853) = 50,537 - 29,727 = 20,810. Shares: diluted 4,530 / 4,090 - 1 = 10.8% (2021-2025); outstanding June 2026 5,043 against 4,090 diluted in 2021 = 23% more. China share of revenue 12,694 / 52,853 = 24.0% (2025); 15,532 / 53,101 = 29.2% (2024); China 12,694 / 22,961 - 1 = -44.7% (2021-2025). Gross margin 43,815 / 79,024 = 55.4% (2021); 21,711 / 54,228 = 40.0% (2023). R&D 16,546 - 13,774 = 2,772; R&D share of revenue 13,774 / 52,853 = 26.1% (2025), 16,546 / 53,101 = 31.2% (2024). Operating cash flow to gross capital spending 9,697 / 17,672 = 0.55. All Other external revenue: 54,228 - 32,305 - 15,980 - 547 = 5,396 (2023); 53,101 - 33,346 - 16,125 - 159 = 3,471 (2024); 52,853 - 32,228 - 16,919 - 307 = 3,399 (2025). Trailing EPS to June 2026: -0.06 - (-0.19 - 0.67) + (-0.73 - 2.16) = -2.09. Market value 669.37 / 86.48 = 7.7 times end-2024; share price 127.39 / 29.23 = 4.4 times the 52-week low - segment margins, revenue mix and market shares. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Intel's Forms 10-K, 10-Q, results releases, prepared remarks and market data; operands shown in the source line.
Sources
Generated September 25, 2026