Intel Corp shares jumped after the chipmaker returned to profitability and gave an upbeat revenue forecast, suggesting that it’s making progress on a long and challenging comeback attempt.
Fourth-quarter sales will be roughly $13.3bn, the company said in a statement on Thursday. Though that was just below Wall Street’s average estimate, some analysts were still including revenue from a unit that Intel just spun off — money that wasn’t part of the company’s forecast.
The outlook signals that Intel is on the right track following a turbulent year. In the stretch of a few months, new Chief Executive Officer Lip-Bu Tan secured an unconventional investment from the US government — a transaction brokered by the White House — and won backing from Nvidia Corp and SoftBank Group Corp.
Investors applauded those deals, sending Intel shares up 90% this year. The company went from being one of the worst performers in the Philadelphia Stock Exchange Semiconductor Index to one of the best. The value of the US government’s stake is about $17.2bn, an $8.3bn gain on paper since the deal was inked in August. Under that agreement, the government said it would buy 433.3mn shares of Intel’s common stock at $20.47 per share.
But concerns have lingered over whether Intel can manufacture products that attract customers again. Though the company remains the biggest maker of personal computer processors, that market has been less reliable in recent years. Intel also has struggled to capitalise on the surge in artificial intelligence spending — a frenzy that has greatly benefited Nvidia.
For now, a PC rebound is helping bolster Intel’s results.
“Current demand is outpacing supply, a trend we expect will persist into 2026,” Chief Financial Officer Dave Zinsner said in the statement. The company’s third-quarter results exceeded its projections, based on “the underlying strength of our core markets,” he said.
In another promising sign, Intel returned to profitability in the period that ended September 27. The Santa Clara, California-based company posted its first quarterly net income since the end of 2023.
Intel spun off its Altera programmable chip unit in September and now owns a minority stake in the business. That removed $400mn to $500mn in revenue from its fourth-quarter projection.
Intel’s guidance “looks better” compared with estimates if you strip out the Altera sales, Zinsner said in an interview.
The deals with the US government and tech companies are bringing about $15bn of new funds that can help shore up Intel’s balance sheet. This month, the chipmaker also announced new products and manufacturing technology. Those operational improvements will have to kick in – helping Intel win back lost market share and production orders – before the company’s financial state will fundamentally improve.
In the third quarter, revenue rose 3% to $13.7bn. Profit was 23 cents a share, excluding some items. Analysts had estimated sales of $13.2bn and earnings of 1 cent on average, according to data compiled by Bloomberg.
Intel said on a conference call that it repaid $4.3bn in debt during the third quarter, ending the period with $30.9bn in cash and short-term investments. Nvidia’s $5bn investment, announced last month, is expected to close in the current quarter.
Investors are waiting for Intel’s CEO to give more concrete details on how he plans to reclaim leadership of an industry it dominated for decades. Tan was named to the job in March, following the ouster of Pat Gelsinger last year.
Tan has indicated so far that he’ll pursue a similar approach as Gelsinger — but with much tighter financial discipline. That means cutting jobs and holding off on manufacturing plans if the return on investment isn’t clear.
But that stance has raised its own concerns because it suggests Intel may no longer stay at the cutting edge of the chip industry. Slowing the construction of new factories also has drawn flak from politicians who are looking to foster domestic manufacturing.
Intel’s factories, despite falling behind the capabilities of rivals such as Taiwan Semiconductor Manufacturing Co, are the most advanced plants owned and operated by any American company in its home country.
Under Gelsinger, Intel had vowed to turn a site in Ohio into the world’s biggest chipmaking facility. That project has now been delayed until the 2030s, but the company recently said it remains committed to the plan.
Intel plans to spend about $18bn on new plants and equipment this year and reduce its outlay next year. That level puts it far below what TSMC is spending.
Zinsner, the CFO, said that the company may now be faced with the “high-class problem” of having to spend more next year than it budgeted — to make sure it has enough supply to meet improving demand.
Intel’s client computing division had revenue of $8.5bn last quarter, topping the average prediction of $8.2bn. Data centre sales were $4.1bn, compared with a $3.97bn estimate.