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Intel eyes recovery as PC demand rebounds while Q3 revenues beat Wall Street analysts’ expectations despite $16.6 billion in losses

Intel Corp reported strong revenues for its third quarter on October 31, beating Wall Street expectations and fueled optimism for its core PC and server businesses. However, the chipmaker has continuing profitability challenges and trails behind competitors in the rapidly growing AI chip market. Its shares jumped over 7% in extended trading on the report, though it pared back those gains later.

Intel reported a third-quarter net loss of $16.6 billion which declined sharply from the comparative figure of the previous fiscal year, where it turned a net profit of $300 million. The setback arose from restructuring and impairment charges as Intel sought a new life in the face of a depressed semiconductor industry. Intel's finance chief David Zinsner admitted such a challenge but insisted on having “made progress towards achieving profitability targets but not out of the woods with lots of work to be done.”.

Revenue for Intel's Client Computing Group, which makes the company's PC chips, fell 7% to $7.3 billion, narrowly beating analysts' estimates of $7.38 billion. The group benefited from renewed demand as on-device AI features and the latest Windows update spurred a recovery in PC sales. This rebound, following a years-long slump in PC demand, helped Intel top analysts' low expectations.

The Data Center Group, which includes all semiconductors involved with AI, reported that it had grown 9% to $3.3 billion, beating Wall Street's expectations of around $3.16 billion. Chipmaker Intel stated it believes that demand will strengthen for traditional server chips during the second half of this year, as companies flood the AI chip segments that Nvidia and AMD enjoy leads in.

To regain its competitive edge, Intel is investing between $12 billion and $14 billion in capital expenditures in 2025. Most of that investment will go toward manufacturing its advanced 18A node technology, which the company said will start high-volume manufacturing late in 2025. Intel CEO Pat Gelsinger said the advanced production will mainly support Intel's own products, though the company will still partner “selectively” with contract chipmaker TSMC.

Intel's adjusted gross margin came at 18 per cent, a bit much lower than what is anticipated by analysts at about 37.9%. Its adjusted net loss came out at 46 cents in this quarter, still very far from its expected recoveries. Still, with confidence, Intel forecast the revenues for the fourth quarter in the range of $13.3 billion and $14.3 billion with a midpoint that outreaches the average for the analysts' forecasts on the LSEG at around $13.66 billion.

According to market analysts, Intel's results surpassed lowered expectations. “Let's be honest, expectations were quite low for the company and they beat those lowered expectations,” said Carson Group chief market strategist Ryan Detrick. Even though it lags in AI chip technology, investors appear supportive of the efforts of the chipmaker to regain profitability and the guidance that there is a positive outlook on the PC and data centre markets.