Intel Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Intel Corp's Q3 2025 earnings call highlighted solid financial results, strategic partnerships, and progress in foundry services, with a focus on AI-driven growth and improved execution.
Key Financial Results
Q3 revenue was $13.7 billion, exceeding guidance and up 6% sequentially.
Non-GAAP gross margin was 40%, exceeding guidance due to higher revenue, favorable mix, and lower inventory reserves.
Q3 earnings per share (EPS) was $0.23, above guidance, driven by higher revenue, stronger gross margin, and cost discipline.
Q3 operating cash flow was $2.5 billion, with gross CapEx of $3 billion, and positive adjusted free cash flow of $900 million.
Business Segment Results
Intel Products revenue was $12.7 billion, up 7% sequentially, exceeding expectations in client and server.
CCG (Client Computing Group) revenue was $8.5 billion, up 8% quarter-over-quarter, driven by a stronger TAM, Windows 11 refresh, and a stronger pricing mix with Lunar Lake and Arrow Lake.
DCAI (Data Center and AI) revenue was $4.1 billion, up 5% sequentially, exceeding expectations due to improved product mix and higher enterprise demand.
Intel Foundry delivered revenue of $4.2 billion, down 4% sequentially.
All Other revenue was $1 billion, with Altera contributing $386 million, down 6% sequentially due to the intra-quarter closure of Altera.
Capital Allocation
Secured roughly $20 billion of cash through strategic partnerships.
Exited Q3 with $30.9 billion of cash and short-term investments.
Received $5.7 billion from the US government, $2 billion from SoftBank Group, $4.3 billion from the Altera closure, and $900 million from the Mobileye stake sale in Q3.
Repaid $4.3 billion of debt in the quarter and will continue prioritizing deleveraging by paying maturities as they come due in 2026.
2025 gross capital investment is anticipated to be approximately $18 billion.
Expect to deploy more than $27 billion of CapEx in 2025 versus $17 billion deployed in 2024.
Industry Trends and Dynamics
Rapid adoption of AI is driving growth in traditional compute.
Client refresh is occurring five years post the COVID pull forward.
Enterprises continue to migrate to Windows 11, and AI PC adoption is growing.
The accelerating buildout of AI infrastructure is positive for server CPU demand.
CPU TAM is expected to continue to grow in 2026.
Client consumption TAM is expected to approach 290 million units in 2025.
AI is driving both refresh of the installed base and capacity expansion in traditional servers.
Competitive Landscape
Competition remains intense in the high-end desktop segment.
Working to regain shares by improving multi-threading capabilities.
Macroeconomic Environment
Vigilance remains regarding macroeconomic volatility.
Customer purchasing behavior and inventory levels are healthy, and industry supply has tightened materially.
Growth Opportunities and Strategies
Focus on strengthening the balance sheet and improving cash position.
Committed to advancing the Trump administration's vision to restoring semiconductor production.
Improving engineering and design execution, including hiring top architecture talents and reimagining the core roadmap.
Created the Central Engineering Group to unify horizontal engineering functions and drive leverage across foundational IP development.
Building a new ASIC and design service business to deliver purpose-built silicon for external customers.
Positioning Intel as a compute platform of choice for AI inference and partnering with incumbents and emerging companies.
Focusing on capability and scalability in foundry investments, adding capacity only with committed external demand.
Collaborating with NVIDIA to create a new class of products and experiences spanning multiple generations to accelerate AI adoption.
The x86 architecture has been the foundation of the digital revolution that powers the modern world and Intel is on a path to ensure x86 remains at the heart of it.
Financial Guidance and Outlook
Q4 revenue is projected in the range of $12.8 billion to $13.8 billion.
Expect Intel Products up modestly sequentially, but below customer demand due to a tight supply environment.
Expect CCG to be down modestly and DCAI to be up strongly sequentially in Q4.
Intel Foundry revenue is expected to increase quarter-over-quarter due to increased Intel 18A revenue and external foundry revenue.
Q4 gross margin is forecast at approximately 36.5%, down sequentially due to product mix, the impact of Core Ultra 3 shipments, and the deconsolidation of Altera.
Forecast a tax rate of 12% and EPS of $0.08 for Q4 on a non-GAAP basis.
Expect non-controlled income to be approximately $350 million to $400 million in Q4 on a GAAP basis.
Forecast average fully diluted share count of roughly 5 billion shares for Q4.
