Intel Q3 Earnings Beat Expectations, Shares Jump 8%

Intel’s third-quarter earnings report showcased significant improvement across key financial metrics, with adjusted earnings per share of $0.23 dramatically exceeding Wall Street’s expectation of $0.01. This represents a remarkable 150% year-over-year increase and marks the company’s fourth consecutive quarter of improved execution. Revenue performance was equally impressive, with the company reporting $13.7 billion in sales compared to the $13.4 billion analysts had anticipated, representing a 3% year-over-year increase.

The company’s profitability metrics showed substantial improvement, with net income surging 124% year-over-year to $4.1 billion. Adjusted gross margin expanded by 220 basis points to 40.0%, while adjusted operating income jumped 164% to $1.5 billion. Operating efficiency also improved significantly, with adjusted operating expenses declining 17% year-over-year to $3.9 billion and research and development expenses falling 20% to $4.4 billion. These improvements contributed to strong cash generation, with cash from operations reaching $2.5 billion and free cash flow of $896 million.

Intel’s Client Computing Group emerged as the standout performer, delivering $8.5 billion in revenue with a 5% year-over-year increase, soundly exceeding expectations. The Data Center and AI group also surpassed Wall Street forecasts with $4.1 billion in revenue, though this represented a slight 1% decline compared to the same period last year. The company’s ‘All Other’ category showed modest growth, increasing 3% year-over-year to $1.0 billion.

However, the company’s critical Foundry unit presented a notable concern, reporting $4.2 billion in revenue that fell short of the $4.5 billion Wall Street had expected. This represents a 2% year-over-year decline for the segment that Intel leadership has identified as crucial for the company’s long-term rebound strategy. The underperformance in this key growth area contrasts with the strong results from Intel’s more established business units.

CEO Lip-Bu Tan emphasized that the Q3 results reflect “improved execution and steady progress against our strategic priorities.” He highlighted the accelerating demand for artificial intelligence as creating “attractive opportunities across our portfolio, including our core x86 platforms, new efforts in purpose-built ASICs and accelerators, and foundry services.” Tan pointed to Intel’s “industry-leading CPUs and ecosystem, along with our unique U.S.-based leading-edge logic manufacturing and R&D” as positioning the company well to capitalize on emerging technology trends.

CFO David Zinsner provided crucial insight into the company’s demand environment, stating that “current demand is outpacing supply, a trend we expect will persist into 2026.” This optimistic outlook suggests sustained growth potential for the chipmaker. Zinsner also highlighted strategic moves to strengthen Intel’s balance sheet, including “accelerated funding from the U.S. Government and investments by NVIDIA and SoftBank Group that increase our operational flexibility and demonstrate the critical role we play in the ecosystem.”

Despite the strong quarterly performance, Intel’s guidance for the fourth quarter presented a more cautious picture. The company projected revenue between $12.8 billion and $13.8 billion, with the midpoint falling below Wall Street’s current expectation of $13.37 billion. Earnings per share guidance of $0.08 matched analyst expectations, though the company noted it expects fourth-quarter EPS attributable to Intel of $(0.14) on a GAAP basis.

Investors on Nasdaq clearly focused on the positive aspects of the report, sending Intel shares up 7.7% in after-hours trading to $28.40 as of 4:40 p.m. ET. The market’s reaction suggests confidence in Intel’s execution improvements and the management team’s optimistic demand outlook through 2026. Wall Street analysts are expected to closely scrutinize the company’s progress in its foundry business during the earnings conference call, particularly given the unit’s underperformance relative to expectations in the current quarter.