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INTEL CORP (INTC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered upside on revenue ($13.7B, +3% YoY) and a material non-GAAP EPS beat ($0.23 vs S&P Global consensus ~$0.007), with non-GAAP gross margin at 40.0% vs guidance of ~36%—driven by higher revenue, favorable mix, and lower inventory reserves. Bold surprise: non-GAAP EPS and gross margin both well above guidance and consensus .
    S&P Global values marked with * below.
  • Guidance: Q4 revenue $12.8–$13.8B, non-GAAP GM ~36.5%, non-GAAP EPS $0.08; broadly in line with S&P consensus revenue ~$13.369B* and EPS ~$0.081*; Altera excluded from Q4 .
  • Strategic catalysts: $5.7B accelerated U.S. government funding, announced $5.0B NVIDIA and $2.0B SoftBank equity investments; NVLink-based collaboration with NVIDIA to co-develop multi-generation AI/data center and PC products .
  • Watchpoints: persistent capacity constraints on Intel 10/7, Foundry losses (though improving), and explicit risk that SEC accounting views on government-related transactions could prompt material revisions to Q3 results .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP gross margin beat (40.0% vs ~36% guided), non-GAAP EPS $0.23 above guidance of ~$0.00 and consensus; revenue came in above the high end of guidance ($13.7B vs $12.6–$13.6B guided) .
  • CCG strength and AI server CPU tailwinds: CCG revenue $8.5B (+8% QoQ) and DCAI up 5% sequentially, supported by Windows 11 refresh, Lunar/Arrow Lake ramps, and Granite Rapids traction; “demand outpacing supply” persists .
  • Strategic balance sheet actions: $5.7B U.S. government funding received in Q3; announced NVIDIA $5.0B and SoftBank $2.0B investments; Altera stake sale proceeds; CEO: “AI is accelerating demand for compute…position us well to capitalize” .

What Went Wrong

  • Ongoing supply constraints (Intel 10/7), substrate tightness, and capacity prioritization; CFO: shortages likely peak in Q1, limiting ability to buck normal seasonality .
  • Foundry remains loss-making despite sequential improvement (Q3 Foundry operating loss $(2.3)B vs $(3.2)B in Q2); GAAP gross margin guide down sequentially into Q4 on mix and new product ramps .
  • Accounting risk: Intel flagged limited precedent and ongoing SEC staff consultation; Q3 results may be revised if differing views arise (potentially material) .

Financial Results

Core P&L vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($B)$13.3 $12.9 $13.7
Gross Margin (GAAP, %)15.0% 27.5% 38.2%
Gross Margin (Non-GAAP, %)18.0% 29.7% 40.0%
R&D + MG&A (GAAP, $B)$5.4 $4.8 $4.4
R&D + MG&A (Non-GAAP, $B)$4.8 $4.3 $3.9
Operating Margin (GAAP, %)(68.2)% (24.7)% 5.0%
Operating Margin (Non-GAAP, %)(17.8)% (3.9)% 11.2%
Net Income (GAAP, $B)$(16.6) $(2.9) $4.1
Diluted EPS (GAAP, $)$(3.88) $(0.67) $0.90
Diluted EPS (Non-GAAP, $)$(0.46) $(0.10) $0.23
Cash from Operations ($B)$4.054 $2.050 $2.546
Adjusted Free Cash Flow ($B)$(2.702) $(1.050) $0.896

Segment revenue and operating income

SegmentQ3 2024 Revenue ($B)Q2 2025 Revenue ($B)Q3 2025 Revenue ($B)
Client Computing Group (CCG)$8.161 $7.871 $8.535
Data Center & AI (DCAI)$4.141 $3.939 $4.117
Intel Foundry$4.339 $4.417 $4.235
All Other$0.964 $1.053 $0.993
Intersegment Eliminations$(4.321) $(4.421) $(4.227)
Total Consolidated$13.284 $12.859 $13.653
SegmentQ3 2024 Operating Income ($B)Q2 2025 Operating Income ($B)Q3 2025 Operating Income ($B)
CCG$2.937 $2.053 $2.694
DCAI$0.381 $0.633 $0.964
Intel Foundry$(5.799) $(3.168) $(2.321)

Estimates vs Actuals and Guidance

MetricQ3 2025 ConsensusQ3 2025 ActualSurprise
Revenue ($B)$13.138*$13.653 +$0.515
Primary EPS ($)$0.007*$0.23 +$0.223
MetricQ4 2025 ConsensusQ4 2025 Guidance
Revenue ($B)$13.369*$12.8–$13.8
Primary EPS ($)$0.081*$0.08 (Non-GAAP)
MetricFY 2025 ConsensusFY 2026 Consensus
Revenue ($B)$52.552*$53.838*
Primary EPS ($)$0.340*$0.596*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q4 2025N/A$12.8–$13.8 New (excludes Altera)
Gross Margin (Non-GAAP, %)Q4 2025N/A~36.5% New
EPS (Non-GAAP, $)Q4 2025N/A$0.08 New
Tax Rate (Non-GAAP, %)Q4 2025N/A~12% New
Non-controlling income (GAAP, $B)Q4 2025N/A~$0.35–$0.40 New
Gross Capital Investment ($B)FY 2025$18.0 (Q2) ~$18.0 (reiterated) Maintained
Operating Expenses (Non-GAAP, $B)FY 2026$16.0 (Q2) $16.0 (reiterated) Maintained

Additional note: Intel flagged that Q3 results may be revised pending SEC consultation on U.S. government transactions accounting .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI compute strategyQ1: Ramp 18A in 2H25 for Panther Lake; Xeon 6 AI uplift . Q2: Granite Rapids host CPU roles; Panther Lake on track .CEO: “AI is accelerating demand for compute,” Nvidia NVLink collaboration; focus on inference GPUs (Crescent Island) .Expanding partnerships; stronger AI positioning and roadmap clarity.
Supply chain/capacityQ1/Q2: Streamlining footprint; exit Germany/Poland projects; slower Ohio pace; substrate constraints noted .Broad shortages across Intel 10/7; “peak” constraints likely in Q1; demand-shaping, prioritizing server over entry client .Tight supply persists into 2026; active mix/prioritization.
Foundry progressQ1: 18A ramp H2’25; Q2: start of production wafers; 18A PDK milestones .Fab 52 fully operational on 18A; continued 18A/14A milestones; disciplined capacity adds; Foundry loss narrows sequentially .Execution improving; loss narrowing; long-term confidence rising.
Product performanceQ1/Q2: Client portfolio updates; Xeon 6 launch; Panther Lake timing .CCG +8% QoQ; Granite Rapids TCO/power gains; Lunar/Arrow ramp; Windows 11 refresh; Core Ultra 3 first shipments impact Q4 GM .Strong client momentum; server mix improving; initial ramp costs near term.
Macro/policyQ1/Q2: CHIPS incentives; operational efficiency targets .$5.7B U.S. funding received; SEC accounting consultation risk disclosed .Policy support strengthens; accounting clarity pending.

Management Commentary

  • CEO: “AI is accelerating demand for compute and creating attractive opportunities across our portfolio… Intel’s industry-leading CPUs and ecosystem, along with our unique U.S.-based leading-edge logic manufacturing and R&D, position us well to capitalize on these trends over time.”
  • CFO: “Current demand is outpacing supply, a trend we expect will persist into 2026.”
  • CFO on Q3 drivers: “Non-GAAP gross margin was 40%, four points better than our guidance on higher revenue, a more favorable mix, and lower inventory reserves…”
  • CEO on Foundry: “Fab 52… dedicated to high-volume manufacturing… is now fully operational… our conviction in the market potential for Intel Foundry continues to grow.”
  • CFO on 18A yields: “Yields are adequate to address supply…but not yet where we need them to be to drive appropriate margins; by end of next year we’ll probably be in that space.”

Q&A Highlights

  • Foundry margin trajectory: CFO expects Foundry gross margins to improve with scale and leading-edge mix (18A/14A), plus startup cost normalization over coming years .
  • Supply constraints: Tight across Intel 10/7 and substrates; Q1 likely peak constraints; company demand-shaping toward server CPU mix .
  • 18A and capacity: Ramp continues through 2026; incremental capacity not large next year; yield trajectory improving toward industry-acceptable levels beyond next year .
  • NVIDIA collaboration: Multi-year, NVLink-based fusion with x86 to expand Intel’s TAM; heavy engineering engagement; incremental opportunity beyond current TAM .
  • Q4 mechanics: Non-GAAP GM down sequentially on mix/new product ramp (Core Ultra 3) and Altera deconsolidation; expected NCI ~$350–$400M GAAP .

Estimates Context

  • Q3 2025 beat: Revenue $13.653B vs ~$13.138B* consensus; non-GAAP EPS $0.23 vs ~$0.007* consensus—significant upside on margin execution and mix .
    Values retrieved from S&P Global.*
  • Q4 2025 in-line: Guidance midpoint (~$13.3B) broadly aligned with ~$13.369B* consensus; non-GAAP EPS guide $0.08 essentially in line with ~$0.081* .
    Values retrieved from S&P Global.*
  • FY 2025/2026 consensus: ~$52.55B* / ~$53.84B* revenue and ~$0.34* / ~$0.60* EPS; trajectory will hinge on Foundry margin ramp, client mix, and server competitiveness.
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q3 print showed tangible margin execution and mix benefits; the magnitude of the non-GAAP EPS and GM beats is a positive inflection point despite capacity limits .
  • Near-term setup: Q4 guide is in-line; expect sequential GM headwind from early Core Ultra 3 ramp and Altera deconsolidation; constraints likely peak in Q1—be mindful of typical seasonality .
  • Structural story: Foundry loss narrowing with 18A/14A milestones and Fab 52 operational; watch customer commitments and yield trajectory into 2026 for margin leverage .
  • Strategic capital support reduces risk: $5.7B U.S. funding plus NVIDIA/SoftBank equity bolster liquidity and flexibility; debt paydown underway .
  • Risk flag: SEC accounting consultation on government transactions could lead to material Q3 revisions; incorporate this uncertainty into near-term positioning .
  • AI platform exposure is broadening via NVIDIA collaboration and inference GPU roadmap (Crescent Island); monitor translation to revenue/GM in 2026+ .
  • Trading lens: Strong beat with in-line guide and supply constraints suggests limited near-term estimate upside; any clarity on SEC accounting and capacity relief could be catalysts. Longer-term thesis rests on Foundry margin inflection, client cost improvements, and server competitiveness .