Intel stock price jumps 7% on positive outlook despite Q3 losses

Intel (INTC) released its Q3 earnings after the market closed on Thursday, exceeding revenue expectations but missing earnings per share estimates due to impairment charges. However, strong guidance for Q4 and better-than-expected data center revenue helped drive the stock up by as much as 12% in the aftermath of the report.

Intel Reports Q3 Loss Amid Declining Revenue

the quarter, Intel reported a loss of $0.46 per share on revenue of $13.28 billion, compared to analysts’ expectations of a $0.03 loss per share on revenue of $13 billion. This marks a decline from the previous year’s earnings of $0.41 per share and revenue of $14.1 billion for the same period.

For Q4, Intel anticipates revenue between $13.3 billion and $14.3 billion, slightly below Wall Street's forecast of $13.6 billion. The company also announced it has secured two new customers for its 18A processor.

Revenue from Intel's data center and AI business reached $3.35 billion, surpassing the analyst expectation of $3.1 billion. In the Client Computing segment, which includes chips for laptops and desktops, revenue was $7.3 billion, just shy of the anticipated $7.4 billion and down from $7.8 billion in the same quarter last year.

Intel's Foundry business, which manufactures chips for both Intel and third-party customers, generated $4.35 billion in revenue, slightly missing Wall Street's target of $4.4 billion. This division had reported revenue of $4.7 billion in Q3 2023.

Intel Shares Climb 7% After Reporting Stronger-Than-Expected Earnings

Intel stock surged 7% in after-hours trading on Thursday after the company reported better-than-expected earnings and provided quarterly guidance that exceeded estimates.

Here’s how Intel’s performance compared to the LSEG consensus:

Earnings per Share: Adjusted earnings of 17 cents versus an expected loss of 2 cents.
Revenue: $13.28 billion compared to the anticipated $13.02 billion.

For the fiscal third quarter ending September 28, Intel experienced a 6% year-over-year decline in revenue. The company reported a net loss of $16.99 billion, or $3.88 per share, in contrast to net earnings of $310 million, or 7 cents per share, in the same quarter last year.

As part of its cost-cutting strategy, Intel recognized $2.8 billion in restructuring charges during the quarter. Additionally, there were $15.9 billion in impairment charges related to accelerated depreciation of Intel 7 process node manufacturing assets and goodwill impairment in the Mobileye unit.

Intel Faces PC Chip Slump

Intel has faced challenges due to a prolonged decline in PC chip sales, which is just starting to show signs of recovery amid increasing competition from AMD (AMD). However, there is optimism on the horizon, as PC sales are gradually picking up, despite a slight dip in Q3, according to Gartner.

The company recently launched its second-generation Core Ultra chips for laptops, designed to handle AI tasks and compete more effectively with Qualcomm’s (QCOM) Arm-based chips, particularly regarding battery life. Historically, Intel’s laptop chips have been known for high energy consumption.

This situation contributed to Apple (AAPL) moving away from Intel processors in favor of its own Arm-based chips, which have enabled Apple to achieve better power efficiency and battery life in its products.

Qualcomm's Snapdragon X Elite chips also deliver impressive battery performance compared to Intel-based devices. However, the second-gen Core Ultra aims to change that dynamic by using less power while providing comparable performance.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.