Intel layoffs target Data Center and AI Group despite strong revenue growth and AI boom

Intel Layoffs Strike Core AI and Data Center Division

Intel has initiated another round of Intel layoffs targeting its Data Center and AI Group, the division responsible for server CPUs, AI chips, and data center architecture 1

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. The announcement comes as CEO Lip-Bu Tan accelerates Intel's turnaround plan ahead of the company's second-quarter earnings report scheduled for July 23 2

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. Intel has not disclosed the exact number of positions being eliminated, stating only that the workforce reduction is part of its broader strategy to become a "more focused and efficient company" 1

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The latest cuts add to Intel's aggressive restructuring efforts that have reduced headcount by more than 35,000 since 2024, when former CEO Pat Gelsinger revealed that the data center and foundry divisions had lost $1.6 billion 1

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. More than 5,000 U.S.-based employees have already been laid off in 2025, with most reductions occurring in California, Oregon, Arizona, and Texas 2

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Strong Revenue Growth Fails to Prevent Job Cuts

The timing of these Intel layoffs appears particularly striking given the Data Center and AI Group's recent performance. The division generated $5.05 billion in Q1 2026 revenue, representing 22% growth compared to the same period a year earlier 2

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. Intel shares have surged more than 317% over the past year, climbing from a low of $23 per share to more than $96, as investors have backed Tan's efforts to revive the company 1

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. Intel shares closed Monday up 2.13% at $97.06 and rose another 0.60% to $97.64 in after-hours trading 2

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An Intel spokesperson emphasized that the company is aligning its organization to ensure it has the "right roles" and skills in place to position Intel's AI and data center businesses for long-term success 2

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. The company assured that the reduction won't affect its business commitments or plans to launch new products 1

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Intel's Position in the AI Infrastructure Boom

While the AI infrastructure boom was initially powered by GPUs and memory chips, advancements in agentic AI have significantly increased demand for CPUs, positioning Intel favorably with its Xeon chips 1

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. The company is also reporting customer interest, possibly including Apple, for its 18A and 14A manufacturing nodes. Intel plans to launch an AI GPU in the latter half of 2026 that will compete against Nvidia's RTX Pro 5000 GPU 1

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The Data Center and AI Group oversees Intel's server processors, custom AI chips, and data center technologies, making it one of the company's most strategically important businesses 2

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. This makes the decision to implement cuts in this division particularly noteworthy, as it represents a core growth area during the ongoing data center expansion driven by AI demand.

Broader Industry Context and Intel's Corporate Strategy

Intel's workforce reduction aligns with broader trends across the technology sector. According to Layoffs.fyi, the tech industry has eliminated 121,326 jobs so far in 2026, nearly matching the 122,606 layoffs recorded during all of 2025 2

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. The latest cuts are part of Tan's turnaround plan, which includes reducing Intel's global workforce by approximately 15% since he succeeded Pat Gelsinger as CEO in March 2025 2

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Wall Street expects Intel to report second-quarter adjusted earnings of 22 cents per share on revenue of $14.45 billion, compared with a loss of 10 cents per share on revenue of $12.86 billion during the same quarter last year 2

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. According to Benzinga Edge Rankings, Intel ranks in the 98th percentile for momentum, reflecting a strong medium- and long-term price trend despite recent short-term weakness 2

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. Intel's corporate strategy appears focused on operational efficiency even as it positions itself to capitalize on the expanding AI market and compete more effectively against rivals like Nvidia in both CPU and GPU segments.