**Intel Q3 Earnings Beat Expectations as PC Market Recovers and Balance Sheet Strengthens**
Intel Corporation (NASDAQ: INTC) delivered a strong third-quarter performance, reporting revenue of $13.7 billion, marking a 3% year-over-year increase. This figure came in $560 million above analyst estimates, highlighting a better-than-expected quarter for the chipmaker.
Adjusted earnings per share (EPS) reached $0.23, significantly surpassing analysts’ projections of just $0.01 per share. This represents a sharp turnaround from a $0.46 loss in the same quarter last year, signaling improved profitability for Intel.
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### Financial Position Strengthens
Intel’s balance sheet showed considerable improvement during Q3. Cash and short-term investments rose to $30.9 billion from $22.1 billion at the end of 2024, while total debt decreased by $3.4 billion to $46.6 billion.
Several factors contributed to this stronger financial position:
– The U.S. government converted CHIPS Act grants into an equity investment.
– Investments from SoftBank and Nvidia.
– Intel raised an additional $3.3 billion through the sale of a majority stake in Altera.
CFO David Zinsner emphasized that shoring up the balance sheet will remain a top priority in 2025, providing Intel with greater flexibility to continue its foundry investments.
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### PC Market Recovery Drives Growth
Intel’s Client Computing Group generated $8.5 billion in revenue during Q3, a 5% increase year-over-year. The company attributed this growth to the Windows 11 refresh cycle, as Microsoft ended support for Windows 10.
Intel expects the total addressable market (TAM) for PCs to reach approximately 290 million units in 2025, up from 245 million in 2024 according to Gartner data. This would mark the strongest growth in the PC market since the 2021 pandemic-driven boom.
New product lines, including Lunar Lake and Arrow Lake, helped fuel this stronger performance. Despite some mixed competitiveness in its PC portfolio, an improving demand environment supported Intel’s largest business segment.
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### Data Center Segment: Margin Improvements Amid Flat Revenue
The Data Center and AI segment recorded $4.1 billion in revenue, experiencing a slight 1% year-over-year decline. However, the segment’s operating margin surged to 23.4% from just 9.2% a year earlier, reflecting significant profitability improvement.
CEO Lip-Bu Tan highlighted strong demand for the latest Granite Rapids chips. Intel anticipates growing demand for its data center CPUs as companies address long-standing underinvestment in infrastructure. Additionally, the rising need for AI inference workloads is expected to expand the addressable market further.
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### Manufacturing Process and Supply Challenges
Intel is introducing its 18A manufacturing process, which will power at least three generations of PC and server products. Panther Lake laptop CPUs are expected to ship before year-end using this technology, followed by Nova Lake desktop CPUs and Clearwater Rapids and Diamond Rapids server processors.
Despite its promise, current yield rates on the Intel 18A process remain a concern. CFO Zinsner noted that while yields are sufficient to meet supply needs, they are not yet high enough to generate optimal margins. The process features pioneering technologies such as a new transistor design and backside power delivery, adding complexity.
Supply constraints on older Intel 10 and Intel 7 manufacturing processes limited the company’s ability to fulfill demand in Q3, impacting both data center and client products.
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### Outlook and Market Reactions
Intel plans to prioritize data center production in Q4, focusing on high-margin server CPUs at the expense of entry-level PC chips. This strategy may lead to a modest sales decline in the client computing segment but is expected to result in strong sequential growth for data center revenues.
Market analyst Baird raised its price target on Intel to $40 from $20 while maintaining a Neutral rating. The firm is optimistic about Intel’s 14A process technology, calling it the biggest potential breakthrough for the company in 2026.
Intel’s stock currently trades at $38.28, down more than 40% from its multiyear high, reflecting market volatility despite the company’s operational improvements and growth prospects.
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*Intel’s Q3 results and strategic focus position it well to capitalize on recovering PC demand and evolving data center needs as the semiconductor industry advances.*
https://coincentral.com/intel-intc-stock-crushes-earnings-as-top-analyst-doubles-price-target/
