Intel Stock Gained 7%, Exceeded Expectations

Intel Rises Following Third Quarter Results

Intel (INTC) shares gained 7% after the company’s third-quarter earnings and revenue report exceeded Wall Street expectations. Intel reported revenue of $13.7 billion for the three-month period ending on September 27; this figure surpassed the $13.15 billion anticipated in Bloomberg data and last year’s $13.28 billion. The company stated that its adjusted earnings per share were $0.23, which is above Wall Street's estimate of $0.01. However, the company recorded a loss of $0.46 in the same period last year.

CEO Lip-Bu Tan stated, “Artificial intelligence is driving computational demand and creating attractive opportunities in our portfolio.” Intel’s head of investor relations, John Pitzer, stated in an interview with Yahoo Finance, “We are well-positioned to play a more pronounced role in the AI space.”

Intel expects an adjusted earnings per share of $0.08 for the fourth quarter, which is below the analysts' estimate of $0.10. The company indicated it expects to generate $13.3 billion in revenue, below the anticipated $13.4 billion. Intel noted that the reason its fourth-quarter guidance fell below analyst estimates is that it does not include revenue from the Altera firm, which the company divested in the third quarter.

The company’s third-quarter results come as the U.S. government is tracking major investments in firms like Nvidia (NVDA) and SoftBank (9984.T). The government acquired a 9.9% stake at the end of August, which corresponded to a predetermined 4% stake in Nvidia’s $5 billion investment. These investments have strengthened Intel’s balance sheet and increased hopes of a transformation under new CEO Lip-Bu Tan.

Despite this, analysts and investors express that these investments have been insufficient to change the current state of Intel’s third-party manufacturing business. Intel’s manufacturing arm, Intel Foundry Services, reported an operating loss of $2.3 billion for the third quarter; this is above analysts' expectation of $2.2 billion, but an improvement from last year’s $5.8 billion loss.

Wall Street harbors concerns that the high expenditures made in this new segment will not yield the expected returns. So far, this business area has failed to attract external customer commitments. However, policymakers have made significant investments in Intel due to the company’s geopolitical importance; it is known that most of the world’s computer chips are produced in Taiwan and that Intel is a major U.S.-based advanced semiconductor manufacturer.