Intel beat expectations for September-quarter profit as CEO Lip-Bu Tan's drastic cost-cutting measures helped the chip maker shore up its finances amid a slew of high-profile investments in the company.
Reuters
Intel INTC-Q beat expectations for third-quarter profit as CEO Lip-Bu Tan’s drastic cost-cutting measures helped the chip maker shore up its finances amid a slew of high-profile investments in the company.
Shares jumped more than 8 per cent in after-hours trading.
This marks the Santa Clara, Calif.-based company’s first earnings announcement after multibillion-dollar investments from Nvidia and Japan’s SoftBank as well as an unprecedented U.S. government stake, with investors anticipating a major cash boost.
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Intel received the SoftBank money in the third quarter but has not yet received Nvidia’s cash, finance chief Dave Zinsner said in an interview with Reuters.
The investments are expected to be a major lifeline for Intel, which has been struggling to maintain its dominance in the PC and server CPU markets as it competes with Advanced Micro Devices, while repeated attempts to break into the AI chip market commanded by Nvidia NVDA-Q have not produced results.
After its share price dropped about 60 per cent last year due to these concerns, Intel stock has risen nearly 90 per cent so far in 2025 thanks to the new investments in the company, helping it outperform the stock of artificial-intelligence chip leader and Wall Street darling Nvidia.
“Shares popped after-hours based on better-than-feared guidance ex-Altera, visible cost and gross margin progress, AI-PC buzz, and $15B of fresh strategic funding that shores the balance sheet,” said Michael Schulman, chief investment officer at Running Point Capital.
Investments from SoftBank, Nvidia and the U.S. government represent a lifeline for Intel under CEO Lip-Bu Tan, which has been struggling to maintain its dominance in the PC and server CPU markets.Ann Wang/Reuters
Nvidia said last month it would invest US$5-billion in Intel, giving it a stake of about 4 per cent after new shares are issued. In August, Intel secured $2-billion from SoftBank.
After U.S. President Donald Trump called for CEO Tan’s resignation over ties to China, a hastily arranged Washington meeting produced an unusual deal involving the U.S. government taking a 10 per cent stake for US$8.9-billion.
Demand for Intel’s chips was strong enough during the third quarter that the company is tight on supply, Zinsner said. One of the factors is that data centre operators have realized that they need to upgrade the central processor (CPU) in order to keep pace with the advanced AI chips, he said. Upgrading the CPU gives power and performance advantages that help build and run AI applications.
“We’re under shipping demand at this point, which I guess is a high-class problem,” Zinsner said.
For the September quarter, it recorded adjusted gross margins of 40 per cent, beating estimates of 35.7 per cent, while adjusted profit of US23 cents per share also outperformed expectations of a profit of 1 cent per share, according to data compiled by LSEG.
The company will end the year with a work force that is over one-fifth smaller than last year, it had said in July, while Tan has significantly pared back the expensive manufacturing ambitions of his ousted predecessor, Pat Gelsinger.
Tan has aggressively cut costs and divested assets, after Gelsinger’s ambitions of turning Intel into a contract manufacturer of chips that would compete against Taiwan’s TSMC led to the company in 2024 recording its first annual loss since 1986.
Intel forecast current-quarter revenue between US$12.8-billion and $13.8-billion, with a midpoint of $13.3-billion, compared with analysts’ average estimate of $13.37-billion.