Intel’s Stock Surge After Q3 Earnings Beat Expectations
Intel’s stock saw a notable increase, rising up to 7% in after-hours trading on Thursday following the release of its third-quarter earnings, which surpassed Wall Street’s forecasts.
The company reported a revenue of $13.7 billion for the quarter ending on September 27, which exceeds the $13.15 billion anticipated by analysts, and also tops last year’s figure of $13.28 billion for the same period. In terms of adjusted earnings per share, Intel posted $0.23, significantly higher than the expected $0.01. However, it did indicate a loss of $0.46 for the same timeframe in 2024.
CEO Lip-Bu Tan remarked that, “AI is accelerating computing demand, creating attractive opportunities across our portfolio,” referencing the challenges faced by their manufacturing division.
John Pitzer, Intel’s head of investor relations, offered additional insights in a Yahoo Finance interview, stating, “We believe we are poised to play a more significant role in AI.”
Intel’s chips, notably CPUs, work alongside AI chips in data center servers, integral to running AI software. These CPUs are also used in consumer computers, even in AI-focused PCs.
Looking ahead, the company anticipates an adjusted EPS of $0.08 for the fourth quarter, which is slightly below the $0.10 per share expected by analysts. The forecasted revenue for the next quarter stands at $13.3 billion, which is less than the $13.4 billion that analysts were anticipating.
Intel explained that their cautious guidance for Q4 was primarily due to the exclusion of revenue from Altera, a semiconductor firm they sold part of in the third quarter.
The latest results come amidst significant investments from the U.S. government, Nvidia, and SoftBank. The government took a 9.9% stake in Intel in late August, and Nvidia’s investment of $5 billion secured them a 4% ownership, breathing new life into Intel’s balance sheet. Investors are hopeful for a turnaround under the new CEO.
Nonetheless, analysts and investors express skepticism about whether these investments will positively impact Intel’s struggling third-party manufacturing sector. Traditionally, Intel has manufactured its own chips, but since 2021, it has started serving external customers.
Intel Foundry Services, the company’s manufacturing branch, reported an operating loss of $2.3 billion in Q3—wider than the predicted $2.2 billion but an improvement compared to last year’s $5.8 billion loss.
Ben Bajarin, principal analyst at Creative Strategies, commented that the results from Intel prompt “cautious optimism,” although future attention must focus on their foundry operations.
There are concerns on Wall Street regarding hefty spending in relatively new arenas, especially considering Intel has yet to secure significant contracts with outside clients. Investors remain focused on the company’s importance in national and geopolitical matters, particularly as many semiconductor products are produced in Taiwan, with Intel being a major advanced manufacturer in the U.S.
Adding complexity to Intel’s situation, there’s a lack of promotion surrounding its latest 18A chip manufacturing process aimed at attracting external customers. Although both Nvidia and Broadcom have reportedly tested the technology, no agreements emerged from those discussions.
Currently, Intel is directing its efforts toward consumer Core Ultra Series 3 chips and a next-generation Xeon 6+ data center chip, expected to launch in the first half of 2026.
Intel is also emphasizing customer acquisition through its upcoming advanced manufacturing process known as 14A. Pitzer noted that feedback from initial customer engagements has been promising, suggesting that the current status of the 14A effort is considerably more advanced than its previous 18A development.
