Intel Shares Gained 7%! Quarterly Reports Released

Intel Corporation (INTC) shares rose by 7% at Thursday's market close following the chip maker's third-quarter earnings report. The company reported revenues of $13.7 billion for the three-month period ending September 27, surpassing analysts' estimates of $13.15 billion tracked by Bloomberg and exceeding last year's same quarter figure of $13.28 billion.

Intel noted that its adjusted earnings per share for the quarter were $0.23, significantly above Wall Street's estimate of $0.01. However, the company reported a projected loss of $0.46 for the same period in 2024.

CEO Lip-Bu Tan stated, "Artificial intelligence is driving demand for processing power and creating attractive opportunities in our portfolio." Additionally, the company's head of investor relations, John Pitzer, said in an interview with Yahoo Finance, "We believe we are well-positioned to take on a more significant role in the area of artificial intelligence."

The company indicated that its forecasted adjusted earnings for the fourth quarter would be $0.08; this figure is below analysts' expectations of $0.10. The revenue forecast is projected to be $13.3 billion, which is below analysts' anticipated $13.4 billion.

Intel explained that its fourth-quarter outlook fell short of analyst estimates because its projections partially excluded revenues from the Altera semiconductor firm, which it divested in the third quarter. Intel's third-quarter results followed significant investments from the U.S. government, Nvidia (NVDA), and SoftBank (9984.T). The government acquired a 9.9% stake in the chipmaker at the end of August, while Nvidia became a 4% shareholder with a $5 billion investment. These investments have strengthened Intel's balance sheet and raised expectations for a transformation under new CEO Lip-Bu Tan.

However, analysts and investors express concerns that these investments have not significantly impacted Intel's struggling third-party manufacturing business. Intel's manufacturing division, Intel Foundry Services, reported an operating loss of $2.3 billion for the third quarter, exceeding the expected $2.2 billion but showing improvement compared to the $5.8 billion loss from the previous year.

Wall Street is worried that the high expenditures on the new segment are not yielding returns. Thus far, this business unit has failed to attract external customer commitments. However, due to the company's geopolitical significance, politicians have invested heavily in Intel's success; most of the world's largest processor chips are manufactured in Taiwan, and Intel stands uniquely positioned as a large-scale, U.S.-based advanced technology semiconductor manufacturer.