Intel Confirms New Data Center Layoffs Amid Turnaround Stock Rally

Intel has confirmed it will implement additional job cuts within its data center division, the unit responsible for Xeon server processors and AI-related hardware, as part of a sweeping restructuring effort under CEO Lip-Bu Tan. The company’s stock jumped as much as 8 percent in early trading on Tuesday, extending a rally that has more than doubled the share price this year. The layoffs arrive just two days before Intel is set to report its second-quarter earnings on 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 the exact number of positions being eliminated. A source familiar with the situation told Bloomberg that the cuts will not affect the unit’s product commitments or long-term roadmaps. In the most recent quarter, the data center and AI division generated $5 billion in revenue, a 22 percent increase year over year, fueled by rising demand for Xeon processors in AI data centers.

That revenue growth underscores a central paradox behind the layoffs. Intel is reducing headcount in the same business segment that powers its financial recovery, signaling that Tan views the turnaround as a matter of efficiency rather than scale. The Xeon line has carved out a growing role as the host processor in AI systems, including Nvidia’s Vera Rubin platform, but Intel still lacks a competitive AI accelerator chip to rival Nvidia’s GPUs. This shortfall has cost the company billions in lost revenue.

Tan, who replaced the ousted Pat Gelsinger in March 2025, has cut tens of thousands of jobs since taking the helm. Intel ended last quarter with about 83,200 employees, down from a peak of nearly 132,000 in 2022, and the company expects to finish the year with roughly 75,000 workers. These reductions follow a broader trend across the technology industry, where companies like Meta and Oracle have shed staff while simultaneously ramping up spending on AI infrastructure.

The U. S. government holds a 10 percent stake in Intel, acquired through converted CHIPS Act grants, a position now worth tens of billions after the stock’s surge under Tan’s leadership. The turnaround has been driven by Intel’s 18A manufacturing process reaching high-volume production, foundry partnerships with Apple and Amazon, and the Xeon business capturing demand from the AI data center buildout.

Intel is scheduled to report earnings on Thursday after the market closes, with the data center group’s performance being the key metric investors will scrutinize. The central question remains whether the revenue trajectory justifies a stock that has more than tripled from its 2024 lows, or if the market has already priced in more progress than the fundamentals can support.