Dive Brief:
- Intel returned to profitability for the first time in nearly two years as the chipmaker saw revenues increase 3% during the third quarter, reaching $13.7 billion. The company reported $4.1 billion in net income, compared with the whopping $16.6 billion net income loss a year ago.
- “We exit Q3 with a significantly stronger balance sheet, solid demand in the near term and growing confidence in our core x86 franchise as well as the longer-term opportunities in Foundry, [application-specific integrated circuits] and accelerators,” EVP and CFO David Zinsner said, speaking Thursday during an earnings call for the three-month period ending Sept. 27.
- The company’s Client Computing Group business segment — which includes revenue for its PC chipsets and processors — grew 5% year over year, while total Intel products overall grew 3%.
Dive Insight:
An improved financial outlook for the storied provider is emerging in the wake of three key deals struck by CEO Lip-Bu Tan, who joined Intel in March with a turnaround plan in mind.
In August, SoftBank committed to investing $2 billion in the company as the investment firm focuses on improving access to the semiconductors that power AI. The U.S. government also took a nearly 10% stake in Intel in connection with funds provided to Intel through the U.S. CHIPS and Science Act.
Last month, Nvidia agreed to purchase $5 billion in Intel stock as part of an alliance between the two companies to develop custom AI PC and server processors.
Intel’s third-quarter reversal is reflecting strong demand for Intel chips amid an ongoing upgrade cycle, as well as the need to support AI chips with more modern, faster processors, according to Forrester Senior Analyst Alvin Nguyen.
“Tan also indicated that Intel will offer custom-designed chips for external customers to compete against Broadcom and Marvell,” said Nguyen, pointing to potential drivers of future growth for Intel.
For CIOs, competition between providers bodes well, as the runaway costs of AI projects threaten to derail adoption plans.
Executives are also monitoring the availability of AI PCs, aiming to time refresh cycles amid vendors’ efforts to attract spending. AI PCs will more than double their share of overall PC shipments by the end of the year, Gartner expects.
Much like every other provider, agentic AI is also top of mind in Intel’s turnaround strategy.
“I continue to believe that we can play a meaningful role in developing compute platforms for emerging inference workloads driven by agentic AI and physical AI,” Tan said. “This will be a far larger market than that for AI training workloads.”
