Intel Q3 earnings set to test stock's rally amid Nvidia, US government investments

Intel (INTC) is set to report its third quarter financial results after the bell on Thursday as Wall Street looks for signals on the future of its struggling manufacturing business.

Analysts expect Intel to report $13.15 billion in quarterly revenue, lower than the $13.28 billion it reported last year, according to Bloomberg consensus estimates. They project the chipmaker will record adjusted earnings per share of $0.01, which would mark a swing from a loss of $0.46 during the same period in 2024.

Intel’s stock price has surged more than 60% since its last quarterly report in July. The tech-heavy Nasdaq Composite (^IXIC) is up just 7% in that time frame.

The upswing follows mass layoffs at the company and a slew of high-profile investments in Intel from the US government, Nvidia (NVDA), and SoftBank (9984.T). The investments bolstered both its balance sheet and investor hopes for a turnaround under new chief executive Lip-Bu Tan.

Still, analysts and investors say those investments do little to change the state of Intel’s struggling third-party manufacturing business, known as foundry.

“Intel’s stock is trading more on external factors than fundamentals right now,” TD Cowen analyst Joshua Buchalter wrote in a note to investors earlier this month. “Recently inked deals with [Nvidia] and the [US government] are unlikely to have an impact on the roadmap (product or foundry) for some time.”

Wall Street fears that heavy spending on the relatively new segment, launched in 2021, may not pay off. So far, the business has failed to attract substantial commitments from outside customers.

Policymakers, however, are heavily invested in the company’s success due to its geopolitical significance: Most of the world’s computing chips are made in Taiwan, and Intel is the only US-based, large-scale advanced semiconductor manufacturer.

Analysts project that the manufacturing arm will report an operating loss of $2.2 billion, an improvement from the $5.8 billion loss in the previous year.

Complicating the path ahead for the business is the fact that Intel is no longer promoting its latest 18A chip production process as a way to attract outside customers. Initial reports indicated both Nvidia and Broadcom (AVGO) were testing the technology, but deals with the firms have failed to materialize.

Instead, Intel has shifted to primarily using 18A for its own internal products, including its Core Ultra series 3 chips for consumers and its Xeon 6+ next-generation data center chip, which is slated to launch in the first half of 2026.

Intel is now focusing on attracting customers through its next-generation advanced manufacturing process, dubbed 14A.

“The most important area of focus will be Intel’s ability to secure external customers for 14A and what could occur if the company is unable to do so,” Cantor analyst CJ Muse said ahead of Intel’s earnings.

While the company’s manufacturing business is behind TSMC’s (TSM) and its products have surrendered market share to rivals AMD (AMD) and Arm (ARM), Intel’s CPUs used in computers and data center servers still command the majority of their respective markets, according to data obtained by investing firm Bernstein.

Analysts project Intel’s Data Center and AI segment revenue will jump to $634 million versus the previous year’s $381 million. Overall, they estimate its Intel Products business will see revenue of $12.1 billion, down slightly from $12.3 billion the previous year.

Bernstein analyst Stacy Rasgon threw cold water on Intel shares’ recent upward swing in a note to investors Monday, writing that that the company’s “overall position is still precarious with substantial share losses still occurring in the product business, manufacturing that still feels up in the air, and numbers [Wall Street consensus projections for revenue and earnings] that seem too high to us into next year, all at a very stretchy valuation.”

Daniel Howley contributed reporting.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.

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