Thank you, Lip Bu. Our Q1 results mostly reflected our view entering the year that our two biggest markets were poised for growth. On the client side, the end of service for Windows 10, the expected growing adoption of AIPCs, and an aging installed base following the COVID era refresh pointed to a PC TAM growing 3% to 5%. Similarly, on the traditional server side, delayed infrastructure upgrades driven by the rapid adoption of AI servers in 2024 supported double-digit CPU core growth this year on a roughly flat unit. More recently, the economic landscape has become increasingly uncertain, driven by shifting trade policies, persistent inflation, and increased regulatory risk. While we have yet to see a meaningful change in customer buying patterns, we think it prudent to manage the business with a level of conservatism going into the second half of the year. First-quarter revenue was $12.7 billion, coming in at the high end of our guidance range, driven by better-than-expected Xeon sales. Similar to Q4 2024, we believe Q1 revenue benefited from customer purchasing behavior anticipation of potential tariffs, it is difficult to quantify the magnitude. Non-GAAP gross margin was 39.2%, approximately three percentage points above our guidance on much stronger-than-expected demand for Raptor Lake combined with improved cost for Meteor Lake. While we continue to see the mix of AIPCs growing throughout the year, the rate of growth off a lower-than-expected Q1 will be lower. We delivered first-quarter earnings per share of 13¢ versus our guidance of breakeven EPS driven by higher revenue, stronger gross margin, and lower operating expenses. I was particularly pleased to see our spending down $400 million sequentially and $700 million year over year as we continue to focus on optimizing our cost structure. Q1 operating cash flow was $800 million.
We had growth CapEx of $6.2 billion with offsets of $1.7 billion in the quarter, resulting in an adjusted free cash flow of negative $3.7 billion. We ended the quarter with a cash balance of $21 billion and received $1.1 billion from CHIPS grants, and $1.9 billion for the final close of our NAND business sale to SK Inox.
Moving to segment results for Q1. As previewed on our Q4 2024 earnings, we updated our segment reporting for Q1 2025. Details can be found in the appendix to our earnings deck and in our Q1 2025 10-Q. The following commentary reflects the updated segmentation and accompanying recasted 2024 financials. Intel products revenue was $11.8 billion, down 10% sequentially but above our expectations.
CCG revenue was down 13% quarter over quarter, below typical seasonality and in line with our expectation with higher-than-expected volumes, offset by product mix and competitive pressure. DCAI revenue was down 5% sequentially and above expectations driven by hyperscaler demand for host CPUs for AI servers and storage compute. Operating profit for Intel products was $2.9 billion, 25% of revenue, and down $632 million quarter over quarter on lower revenue, partially offset by reduced operating expenses. Intel Foundry delivered revenue of $4.7 billion, up 8% sequentially on pull-ins of Intel seven wafers and increased advanced packaging services. Intel foundry operating loss in Q1 was $2.3 billion, roughly flat quarter over quarter and in line with expectations. Structural cost improvements were offset by startup costs associated with the ramp of products on Intel 18.
Turning to all other, revenue came in at $943 million, and was down 15% sequentially, slightly above expectations. The three primary components of all other are Mobileye, Altera, and IMS. Collectively, the category delivered $103 million of operating profit. As Lip Bu stated, we announced on April 14 our intention to sell 51% of Altera to Silver Lake Partners for an almost $9 billion valuation, Intel receiving net cash proceeds of $4.4 billion. We believe the value of our remaining 49% stake in Altera will grow over time through our partnership with Silver Lake, and with the addition of Raghav Hussein as the CEO. We expect this deal to close in the second half of 2025, at which point we expect to deconsolidate Altera from our financial results.
Now turning to guidance. Historically, average sequential growth in Q2 has been roughly flat with Q1. However, the very fluid trade policies in the US and beyond as well as regulatory risks have increased the chance of an economic slowdown with the probability of a recession growing. This makes it more difficult to forecast how we will perform for the quarter and for the year even as the underlying fundamentals supporting growth I discussed earlier remain intact. While we have offsets including a global highly diversified manufacturing footprint to help mitigate tariffs, we will certainly see costs increase, and we feel it prudent to anticipate a TAM contraction. The biggest risk we see is the impact of a potential pullback in investment and spending as businesses and consumers react to higher costs and the uncertain economic backdrop. As a result, we're forecasting a wider than normal Q2 revenue range of $11.2 to $12.4 billion, down 2% to 12% sequentially.
Within Intel products, we expect DCAI to decline at a faster rate than CCG. We expect Intel foundry revenue down quarter over quarter due to pull-ins to Q1, lower wafer and advanced packaging volume, and capacity constraints in Intel seven, which we expect to persist for the foreseeable future. For all other, expect revenue for the sum of those parts to be roughly flat sequentially. At the midpoint of $11.8 billion, we expect a gross margin of approximately 36.5% on lower revenue and mix to our outsourced and lower margin client products with a tax rate of 12% and breakeven EPS all on a non-GAAP basis. As you think about the full year, we recommend you start by using the last ten-year seasonality to model sequential changes in revenue. But be mindful of the significant uncertainty in the market today, especially due to the potential for meaningful tariffs and tight supply on our older nodes. We expect non-controlled income or NCI to net to zero in Q2, and for the full year to be approximately $500 million on a GAAP basis. NCI is still expected to grow in fiscal year 2026, to an updated range of $1.3 to $15 billion on a GAAP basis and meaningfully increase further in future years. As Lip Bu discussed earlier, we're simplifying our organizational structure and the way we work across Intel so that we innovate faster and adapt more quickly where needed to better serve our customers. As a result, we now expect 2025 OpEx of $17 billion, $500 million lower than prior expectations with a 2026 OpEx target of $16 billion. We are likely to have restructuring charges associated with these actions, some of which may be included in our non-GAAP results. Since we have not yet estimated these charges, they are not included in our guidance. These spending reductions will be driven by numerous broad-based transformation activities. Key 2025 focus areas will be refocusing our portfolio, eliminating organizational complexity, transforming our engineering functions, and continuing to drive to leading SG and A efficiency. As Lip Bu stated, we anticipate our 2025 gross capital investment will now be approximately $18 billion, which is below our previous guide of $20 billion, reflecting further operational efficiencies, and better utilization of our construction in progress. While gross CapEx is down, we maintain our range for 2025 net CapEx to be approximately $8 to $11 billion due to uncertainty regarding the timing of the US government fulfilling their obligations in our CHIPS agreement. Beginning the process of delevering our balance sheet in 2025 remains a top priority for us, as evidenced by our lower OpEx and CapEx targets and the value unlock across our non-core assets. I'll wrap up by saying that Q1 was a solid quarter to start even as the rest of the year is more uncertain. We will closely manage what's in our control and react quickly as the environment evolves. I'm encouraged by Lip Bu's leadership and on enhancing our competitive position, improving our balance sheet, setting us on a path to deliver consistent returns to our shareholders. With that, let me turn the call back over to John to begin the Q&A.