Earnings Call Insights: Intel Corporation (INTC) Q3 2025
Management View
- CEO Lip-Bu Tan stated Intel delivered “a solid Q3 with revenue, gross margin, earnings per share above guidance,” marking “the fourth consecutive quarter of improved execution delivered by the underwriting growth in our core markets and the steady progress we are making to rebuild the company.” He emphasized the improvement in cash position and liquidity, citing “accelerated funding from the United States government, important investments from NVIDIA and SoftBank Group and monetizing portion of Altera and Mobileye.”
- Tan stressed Intel’s strategic role, saying, “President Trump and Secretary Lutnick… support highlights Intel’s strategic role as the only U.S.-based semiconductor company with leading-edge logic R&D and manufacturing.” He also noted that Intel is “fully committed to advancing the Trump administration’s vision to restoring semiconductor production.”
- The CEO highlighted AI as a core driver, stating, “AI is clearly accelerating demand for new compute architectures… and it is a strong foundation for sustainable long-term growth as we execute.” He described new partnerships, including, “Our collaboration with NVIDIA is a prime example. We are joining forces to create a new class of products and experience spanning multiple generation that accelerate the adoption of AI.”
- Tan announced organizational changes, including the creation of the Central Engineering Group to “unify our horizontal engineering functions to drive leverage across foundational IP development, test chip design, EDA tools and design platforms.” He also confirmed the company remains on track to “rightsize the company by year-end” and to launch the first Panther Lake SKU by year-end, with additional SKUs in the first half of next year.
- CFO David Zinsner stated, “In Q3, we delivered the fourth consecutive quarter of revenue above our guidance, driven by continued strength in our core markets.” He reported, “Third quarter revenue was $13.7 billion, coming in above the high end of our guidance range and up 6% sequentially.”
- Zinsner noted, “We executed on deals to secure roughly $20 billion of cash, including 3 important strategic partnerships. We exited Q3 with $30.9 billion of cash and short-term investments.”
Outlook
- For Q4, Zinsner forecasted “a revenue range of $12.8 billion to $13.8 billion… At the midpoint, and adjusting for the Altera deconsolidation, Q4’s revenue is roughly flat quarter-over-quarter.”
- He added, “We expect Intel products up modestly sequentially but below customer demand as we continue to navigate supply environment.”
- Zinsner projected a Q4 gross margin of “approximately 36.5%, down sequentially due to product mix, the impact of the first shipments of Core Ultra 3… and the deconsolidation of Altera,” with non-GAAP EPS of $0.08.
- The client consumption TAM for 2025 is expected to “approach 290 million units,” representing “the fastest TAM growth since 2021.”
Financial Results
- Intel reported Q3 revenue of $13.7 billion.
- Non-GAAP gross margin was 40%.
- Third quarter earnings per share was $0.23.
- Q3 operating cash flow was $2.5 billion, with gross CapEx of $3 billion and positive adjusted free cash flow of $900 million.
- Intel products revenue was $12.7 billion. CCG revenue was $8.5 billion.
- PC AI revenue was $4.1 billion.
- Operating profit for Intel products was $3.7 billion.
- Intel Foundry revenue was $4.2 billion, with an operating loss of $2.3 billion.
- All Other segment revenue was $1 billion.
Q&A
- Ross Seymore, Deutsche Bank: Asked if recent collaborations and investments contributed to increased confidence in foundry. Tan explained both product progress and investments like SoftBank are driving confidence, along with “tremendous good progress” on 18A and 14A and advanced packaging demand.
- Seymore followed up on gross margin drivers for 2026. Zinsner said margin improvement largely depends on “the mix,” with initial dilution from Lunar Lake and Panther Lake, but improvement expected as yields and cost structure evolve. He noted, “We should see gross margins improve on the foundry side for sure.”
- Joseph Moore, Morgan Stanley: Inquired about foundry customer commitments and CapEx timing. Tan emphasized building customer trust through “yield improvement, reliability” and matching IP to customer requirements. Zinsner added that current CapEx investments provide “flexibility” to meet demand.
- Moore also asked about supply constraints. Zinsner said shortages are “pretty much across our business,” mainly on Intel 10 and 7, with broader substrate shortages also cited.
- Christopher Muse, Cantor Fitzgerald: Queried whether supply constraints affect both server and client, and Q1 seasonality. Zinsner replied both are affected and Q1 might be “at our peak in terms of shortages.”
- Muse followed up on investment priorities with improved liquidity. Zinsner said, “our first focus is to delever,” with disciplined CapEx based on demand.
- Blayne Curtis, Jefferies: Asked about CapEx and 18A capacity. Zinsner reiterated the $18 billion CapEx target, noting 18A capacity ramp will be gradual.
- Curtis also questioned 18A yield impact on gross margins. Zinsner said yields are “adequate to address the supply, but they are not where we need them to be in order to drive the appropriate level of margins.”
Sentiment Analysis
- Analysts asked probing questions about foundry progress, customer commitments, supply constraints, and margin trajectory, maintaining a neutral to slightly positive tone, congratulating results but pressing for specifics on execution and future profitability.
- Management’s prepared remarks conveyed confidence, with Tan expressing excitement about “the future of computing and opportunities in front of us,” and Zinsner highlighting “growing confidence in our core x86 franchise.” During Q&A, management was direct but cautious, often noting the need for further improvement and emphasizing discipline.
- Compared to last quarter, analyst tone was more focused on operational execution and supply constraints. Management’s tone shifted from emphasizing restructuring and cost discipline to a more forward-looking, opportunity-driven stance, while maintaining caution about challenges.
Quarter-over-Quarter Comparison
- Guidance language shifted from caution about macro uncertainty and restructuring to a focus on capitalizing on AI-driven demand and improved liquidity.
- Strategic focus evolved from internal restructuring and right-sizing to advancing AI partnerships (notably NVIDIA), engineering reorganization, and disciplined foundry expansion.
- Key metric changes include an increase in reported revenue, gross margin, and cash position compared to Q2. Product launches are moving forward, and the company is highlighting progress on 18A and new product roadmaps.
- Management confidence and sentiment improved, especially regarding AI, foundry, and customer collaborations. Analyst focus shifted more toward practical execution and near-term supply/demand dynamics.
Risks and Concerns
- Management cited ongoing “capacity constraints, especially on Intel 10 and Intel 7,” limiting ability to meet demand for both data center and client products.
- Foundry yields and margin improvements remain a challenge, with Zinsner noting yields are not yet at “the appropriate level of margins.”
- Gross margin pressure expected in Q4 from “product mix, the impact of the first shipments of Core Ultra 3… and the deconsolidation of Altera.”
- Supply shortages, particularly in substrates, are expected to persist into Q1 2026, potentially impacting growth.
- Management stressed a disciplined approach to CapEx and the need for customer commitments before expanding capacity.
Final Takeaway
Intel delivered better-than-expected Q3 results, strengthened its balance sheet through major investments and asset monetization, and is doubling down on AI-led growth and foundry expansion. The company projects a robust PC TAM of 290 million units for 2025, highlights new product launches, and remains focused on disciplined capital deployment and operational execution amid ongoing supply constraints. Management’s tone is increasingly confident, centered on AI opportunities, new partnerships, and continued progress in innovation and engineering execution.