Intel (INTC -1.02%) closed at $91.13 on Thursday, up 11.3% in the chip sector's broad rebound. And by the headline numbers, investors just bid up a money loser. Over the past 12 months, Intel's net loss totals about $11.3 billion.
But the losses are not what they appear. Intel's revenue is growing at its fastest pace in more than 15 years, its gross margin is expanding quarter by quarter, and the red ink traces mostly to accounting charges rather than to the business itself.
Put the pieces together, and I think 2027 becomes Intel's first profitable year of this turnaround. Here's a closer look at the arithmetic.
Image source: Intel.
Losses made of paper
The second quarter of 2026 shows the pattern. Intel's revenue rose 25% year over year to $16.1 billion (above even the top of management's April forecast), and the company reported a net loss of $11.0 billion anyway.
Nearly all of that loss came from a single line item, though. Intel booked a $12.5 billion non-cash, mark-to-market charge tied to shares it holds in escrow for the U.S. government under its CHIPS Act agreement. It's an accounting adjustment, not cash leaving the business.
The first quarter tells the same story. Intel reported a $3.7 billion net loss that included a $3.9 billion non-cash goodwill impairment and a $1.1 billion mark-to-market loss on escrowed shares.
Set items like these aside, and the company has already turned. Non-GAAP (adjusted) net income was $1.5 billion in the first quarter and $2.2 billion in the second. The second quarter also produced $7.0 billion in operating cash flow.
The growth is broad, too. Intel's data center and AI (artificial intelligence) segment grew revenue 59% year over year last quarter, accelerating from 22% growth in the first quarter. Client computing revenue rose 13% year over year, and the foundry business grew 31%.
Profitability's building blocks are moving in the right direction as well. Intel's GAAP gross margin went from 39.4% in the first quarter to 40.4% in the second, and management's third-quarter guidance calls for 41% -- a steady expansion. Indeed, management's own forecast already has the bottom line crossing zero, with guidance calling for third-quarter earnings of $0.31 per share on a GAAP basis.
What a profitable 2027 requires
The arithmetic from here is straightforward. Intel projects about $23 billion of GAAP operating expenses for 2026. At a gross margin around 41%, covering those costs takes roughly $56 billion of annual revenue.
The company's current pace runs well past that bar. First-half revenue was $29.7 billion, and third-quarter guidance of $15.8 billion to $16.8 billion implies an annual run rate around $65 billion.
However, this year can't be the one. The first half's $14.7 billion of reported losses is too deep a hole for two profitable quarters to fill.
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Key Data Points
But run the same math forward. If revenue grows even 10% next year (it grew 25% last quarter), Intel would generate about $71 billion of sales in 2027. Holding the guided gross margin in the low 40s, that works out to roughly $29 billion of gross profit against operating expenses somewhere in the mid-$20 billions, allowing for growth in spending. The result would be several billion dollars of operating income and a bottom line comfortably in the black. Even a harsher case, with 5% growth and no margin improvement at all, still lands the year at a profit.
With that said, two things could delay the headline. Additional restructuring charges would push the GAAP number lower, and the escrow-share accounting may result in further paper losses. But those would be charges layered on top of a business that, on current trends, should be solidly profitable in 2027. So that's my prediction: before 2028, Intel posts a profitable year.
What does the prediction mean for the stock? Less than you might hope. At Thursday's close, Intel's market value is about $459 billion -- more than 50 times the adjusted earnings pace of its current and guided quarters. The market isn't waiting to see whether Intel turns profitable. It has already priced the turn, and then some. And the past year shows how quickly the market reprices this name in both directions. Shares have traded as low as $18.97 and as high as $142.35 in that stretch.
I believe the black ink arrives in 2027. But at this price, I'll keep watching from the sidelines.
