Intel cuts more data center jobs as shares jump 8%

Intel has confirmed another round of layoffs in its data center group, the unit behind Xeon server processors and related AI hardware, just two days before the company reports second-quarter earnings on Thursday.

The company said on Tuesday that the division is “aligning its organization to ensure it has the right roles and skills in place to position the business for long-term success,” but did not say how many jobs will be cut. According to Bloomberg, citing a person familiar with the matter, the changes will not affect the unit’s product commitments or roadmaps.

The timing is striking. Intel shares rose as much as 8% in early trading, extending a rally that has pushed the stock more than double this year. At the same time, the business being trimmed is one of the company’s strongest performers: Intel’s data center and AI division generated $5 billion in revenue last quarter, up 22% year over year, driven by demand for Xeon processors used in AI data centers.

That tension sits at the center of CEO Lip-Bu Tan’s restructuring. Rather than expanding headcount in a fast-growing unit, Intel appears to be treating its turnaround as an efficiency effort. The Xeon line has gained importance as a host processor in AI systems, including Nvidia’s Vera Rubin platform, but Intel still lacks a competitive AI accelerator to challenge Nvidia’s GPUs — a gap that the source says has cost the company billions in lost revenue.

Tan, who replaced the ousted Pat Gelsinger in March 2025, has already cut tens of thousands of jobs. Intel ended last quarter with about 83,200 employees, down from a peak of nearly 132,000 in 2022, and has said it expects to finish the year with roughly 75,000.

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The cuts also reflect a broader industry pattern. Companies including Meta and Oracle have reduced staffing while continuing to ramp up spending on AI infrastructure. Intel’s own recovery has been helped by its 18A manufacturing process reaching high-volume production, foundry deals with Apple and Amazon, and rising Xeon demand from the AI data center buildout.

The US government now holds a 10% stake in Intel through converted CHIPS Act grants, a position the source says is worth tens of billions after the stock’s recent surge. When Intel reports on Thursday after the market close, the data center group’s numbers will be the ones investors watch most closely.