Intel Reports Q3 Revenue of $14.2B, Stock Rises Despite Decline; Predicts PC Market Recovery and Growth in Foundry Business

Intel registers 7th consecutive consolidated quarterly fall, but optimism arises from tech industry's pandemic recovery with agreed deals from three significant customers to use advanced chip manufacturing.

Intel's Q3 2023 revenue declined 8% from a year ago to $14.2 billion, while its adjusted earnings per share increased 21 cents higher than expected to 41 cents. Despite a 32% sales drop in Intel's network and edge division, the company saw 300% growth in the newly formed Intel Foundry Services, Intel's chip manufacturing business, and a 18% increase in the Mobileye self-driving car parts subsidiary.
Intel's gross profit margin climbed to 43% in Q3, from last quarter's 36%. Though the chip giant's PC market saw a slump in demand and thereby lower profits, things seem to be stabilizing as Intel's foundry business narrows its losses and increases its revenue and scalability. This has led to the rise of Intel's stock by 10%.
Although Intel has encountered its seventh consecutive quarter of declining sales, analysts from Goldman Sachs and JP Morgan have expressed optimism over Intel's recent execution on its technology roadmap and cost-saving initiatives. The company has exceeded expectations for the third consecutive quarter and has forecasted a revenue growth in Q4, with a predicted adjusted profit of about 44 cents per share.
Intel's CEO, Pat Gelsinger, announced that they have signed three customers for Intel's chip contract manufacturing business, and expects to close a deal with a fourth customer before the year ends. Gelsinger stated that, despite facing stiff challenges from competitors like Nvidia in Intel's data center business, the company is slowly establishing itself as a credible leading-edge foundry supplier due to customer interest in the foundry business.
In preparation for a potential rebound in the PC market, Intel is planning to launch new chips for handling AI on laptops and PCs. The company has also signaled possible advancements in AI, with the unveiling a new chip by the end of this year that will be able to run a generative AI chatbot on a laptop, thereby eliminating the need for cloud data centers.