Intel Corporation (NASDAQ: INTC) has posted a remarkable performance for the third quarter of 2025, presenting a revenue figure of $13.7 billion. This marks a 3% increase year-over-year and overshot analyst expectations by a substantial $560 million.
Adjusted earnings per share (EPS) reached $0.23, significantly higher than the mere $0.01 projected by analysts, showcasing a sharp recovery from the $0.46 loss recorded in the same quarter last year.
The chip giant revealed that transactions with the U.S. government during Q3 remain complex, which might influence revised figures in the future. Currently, Intel is collaborating with the SEC to confirm its accounting procedures, though discussions have been stalled due to the recent government shutdown.
Intel’s balance sheet showed strong progress during the quarter, with cash and short-term investments rising to $30.9 billion from $22.1 billion recorded at the end of 2024. Additionally, total debt was reduced by $3.4 billion, settling at $46.6 billion.
This improved financial position stems from several developments, including the conversion of CHIPS Act grants into equity investments by the U.S. government, along with substantial investments from Softbank and Nvidia. Furthermore, Intel raised $3.3 billion through the sale of a majority stake in Altera, strengthening its financial flexibility.
CFO David Zinsner emphasized that bolstering the balance sheet is a critical focus heading into 2025, indicating that this provides Intel with the means to continue its foundry investments without jeopardizing financial stability.
Revitalization of the PC Business
The client computing segment demonstrated resilience with revenue hitting $8.5 billion, a 5% increase from last year. Intel attributes this uplift to the Windows 11 refresh, particularly following Microsoft’s cessation of support for Windows 10.
Looking ahead, the total addressable market (TAM) for PCs is projected to reach 290 million units in 2025, up from Gartner’s forecast of 245 million for 2024. This surge signals a rebound stronger than any seen since the pandemic-driven boom of 2021.
The launching of newer products such as Lunar Lake and Arrow Lake also supported Intel’s robust third-quarter performance, despite some competitive challenges in its PC lineup.
Conversely, the data center segment generated $4.1 billion in revenue, down 1% year-over-year. However, profitability metrics revealed a contrasting story, with operating margins soaring to 23.4%, a significant increase from just 9.2% in the same timeframe last year.
CEO Lip-Bu Tan pointed out robust demand for the latest Granite Rapids chips. Intel expects rising demand for its data center CPUs as firms confront previous underinvestment in conventional infrastructure. Additionally, the increasing need for AI inferred workloads presents expanded market opportunities.
Manufacturing Developments and Supply Challenges
The transition to the Intel 18A manufacturing process is pivotal, as it is expected to support at least three generations of PC and server products. Panther Lake laptop CPUs are set to ship before the year’s end, followed by the Nova Lake for desktops and Clearwater Rapids and Diamond Rapids server CPUs.
Despite this progress, current yields on Intel 18A have raised concerns; while adequate for meeting supply, they are not sufficient for achieving desired profit margins. The complexity introduced by a new transistor design and backside power delivery in this manufacturing process marks industry-first innovations.
Supply constraints involving older Intel 10 and Intel 7 processes have restricted the company’s ability to meet demand, influencing both data center and client products for Q3.
Intel plans to prioritize data center production in the fourth quarter, gravitating toward high-margin server CPUs while allowing entry-level PC chips to decline modestly in sales. This strategic pivot is expected to significantly bolster growth in the data center segment.
As a testament to its promising future, Baird has raised its price target on Intel from $20 to $40, while maintaining a Neutral rating. The firm expressed confidence in Intel’s early performance with its 14A process technology, noted as the most significant potential breakthrough for the company in 2026.
Currently trading at $38.28, Intel’s stock remains over 40% lower than its recent multiyear peak, reflecting both the volatility of the semiconductor industry and the challenges the company has faced in recent years.
