Strong Earnings Outpace Expectations
Intel saw its stock jump almost 10% after reporting a robust third-quarter profit that exceeded Wall Street expectations. The company posted revenue of $13.7 billion, which was up 6% sequentially and surpassed the high end of its guidance range. Non-GAAP gross margin rose to 40%, a four-point improvement driven by higher revenue, improved product mix, and reduced inventory reserves, though this was partly offset by the early ramp of Intel 18A and higher volume of Lunar Lake products. Earnings per share for the quarter reached 23 cents, outperforming the company’s guidance of break-even EPS, propelled by stronger revenue, improved margins, and disciplined cost management.
Capital and Cash Flow Initiatives Strengthen Balance Sheet
For 2025, Intel prioritized strengthening its balance sheet through a series of major deals, securing $20 billion in cash via three strategic partnerships. At the end of Q3, Intel reported $30.9 billion in cash and short-term investments. Inflows included $5.7 billion from the US government, $2 billion from SoftBank Group, $4.3 billion from the completion of the Altera acquisition, and $900 million from the sale of a Mobileye stake. Additionally, a $5 billion investment from Nvidia is expected to close before year-end.
- Q3 operating cash flow: $2.5 billion
- Gross capital expenditures: $3 billion
- Positive adjusted free cash flow: $900 million
- Debt repayment in Q3: $4.3 billion
Segment Performance and Market Trends
Intel Products revenue reached $12.7 billion for the quarter, marking a 7% sequential increase and beating internal expectations across both the client and server divisions. This growth came despite ongoing capacity constraints, particularly with the Intel 10 and Intel 7 manufacturing nodes. The company cited a refresh of the installed base post-COVID-19, ongoing migration to Windows 11, and the rising adoption of AIPC in data centers as contributing factors to demand.
The accelerating buildout of AI infrastructure is creating positive momentum for server CPU demand, an area where Intel remains focused on maintaining and expanding its competitive position. The company stated its cautious optimism that the total addressable market (TAM) for CPUs will continue to grow into 2026.
Outlook for Q4 and Beyond
Looking ahead to the fourth quarter, Intel forecasts $13.3 billion in revenue and projects a non-GAAP gross margin of approximately 36.5%, reflecting early ramp costs for new products and the deconsolidation of Altera. The company expects a tax rate of about 12% and EPS of 8 cents. Capital expenditures are projected to reach approximately $18 billion for 2025, with total deployment exceeding $27 billion, compared to $17 billion in 2024.
Intel remains positive about its long-term prospects, highlighting opportunities within Foundry, AS6, and accelerator businesses. The company continues to enhance execution by recruiting external talent and focusing on product, process development, and manufacturing improvements.
Key Takeaways
- Intel's Q3 results beat expectations, with higher revenues and profits fueling a sharp rise in share price.
- Strategic partnerships and capital inflows have significantly strengthened Intel’s balance sheet.
- Growth in data center demand, AI infrastructure, and ongoing enterprise refresh cycles are driving business momentum.
- The company forecasts steady revenues for Q4 amid continued investment in new products and manufacturing capacity.
