Intel's fast-growing data centre business missed Wall Street targets as the world's second-largest chipmaker faced stiff rivalry from Advanced Micro Devices.
The company also again delayed the release of its next-generation chips until the end of 2019.
Intel's shares fell almost 5% in extended trading on Wall Street last night.
Sales to data centres that power mobile and web apps, which bring more profit than chips for personal computers, rose 26.9% to $5.55 billion in the second quarter ended June 30.
Analysts had expected revenue of $5.63 billion, according to financial and data analytics firm FactSet.
Intel has been increasingly catering to data centres as revenue from PCs has flattened since shipments peaked in 2011.
AMD, which has been gaining ground with its new server chips, beat estimates for quarterly profit and revenue earlier this week, powered by its EPYC server processors.
On a conference call with investors, Intel's interim chief executive Bob Swan said the firm expected PCs with its next-generation 10nm chips to be in stores during the 2019 Christmas season.
Murthy Renduchintala, Intel's chip architecture chief, said on the call that 10nm data centre chips will be released "shortly after" the consumer PC chips.
Last quarter, the company said the 10nm chips were being pushed from 2018 to 2019 but did not specify when. Intel originally predicted the chips could be ready by 2015.
Costs of the 10nm chips are also expected to put pressure on margins, company executives said.
Another challenge to margin growth is an expected increase in sales of Intel's less-profitable modems that help mobile phones connect to wireless data networks.
Earlier this week, Qualcomm Inc QCOM.O executives said they believed Apple had selected Intel to be the sole supplier of modem chips in the next generation of iPhones. Apple and Intel did not comment on Qualcomm's claim.
Intel said its net income rose to $5.01 billion, or $1.05 per share, from $2.81 billion, or 58 cents per share, in the year-ago quarter.
Excluding items, the company earned $1.04 per share, beating expectations of 96 cents per share, according to Thomson Reuters.
The company benefited from a stabilising PC market, in which worldwide shipments grew for the first time in six years, according to research firm Gartner.
Revenue in Intel's client computing business, which caters to PC makers and is still the biggest contributor to sales, rose 6.3% to $8.73 billion, beating estimates of $8.48 billion.
Intel forecast current-quarter revenue of $18.1 billion, plus or minus $500m, and adjusted earnings of $1.15 per share, plus or minus 5 cents.
Analysts on average had expected revenue of $17.60 billion on a profit of $1.08 per share, according to Thomson Reuters.
It said its net revenue rose 14.9% to $16.96 billion, above estimates of $16.77 billion.
The company is searching for a new chief executive after Brian Krzanich was ousted last month following an investigation that found he had a consensual relationship with an employee in breach of company policy.
The company's chief financial officer Robert Swan is acting as interim CEO.