Despite this positive outlook, Intel reported a significant net loss on Thursday, primarily due to impairment and restructuring costs.
The company has largely missed the opportunity presented by the surge in investments in high-speed, advanced AI chips for data centers, as businesses increasingly adopt generative AI technology—a market currently led by Nvidia, with AMD as a competitor.
In a discussion with Reuters, Intel's finance chief, David Zinsner, acknowledged that while the company is "making progress" toward profitability, there remains "a lot of work to do" to meet its established targets.
For the third quarter, Intel reported a net loss of $16.6 billion, excluding losses related to certain noncontrolling interests, contrasting sharply with a net profit of approximately $300 million in the same period last year.
As a leading manufacturer of PC chips, Intel has seen a resurgence in demand for PCs, driven by the introduction of on-device AI features and a new Windows update cycle, allowing the company to exceed Wall Street's modest expectations.
Revenue from Intel’s Client Computing Group, which encompasses its PC chips for desktops and laptops, declined by 7% to $7.3 billion, while analysts had predicted a slight decrease to $7.38 billion.
Looking ahead, the company anticipates revenue between $13.3 billion and $14.3 billion for the current quarter, with the midpoint surpassing analysts' average estimate of $13.66 billion, according to data from LSEG.
Analysts also foresee a rebound in demand for Intel's traditional server chips—its core data-center semiconductors—in the latter half of the year, following several quarters of subdued demand as investments have shifted toward AI chips.
In the data center segment, which includes AI chips, Intel reported a 9% increase in revenue to $3.3 billion, exceeding analyst expectations of $3.16 billion.
Intel's dominance in the PC and server CPU market is increasingly challenged by AMD, which has surpassed Intel in market valuation and is also a formidable rival to Nvidia, the leader in AI graphics processors.
According to finance chief Zinsner, the company is planning to allocate between $12 billion and $14 billion for capital expenditures in 2025.
The revenue from Intel's contract manufacturing segment, or foundry, declined to $4.4 billion. The company reported an adjusted gross margin of 18%, falling short of analyst expectations, which were set at 37.9%.
Ryan Detrick, chief market strategist at Carson Group, remarked, "To be frank, expectations for the company were quite low, and they managed to exceed those diminished forecasts. Both the product line and foundry performed well, making the quarter a commendable effort from a company facing challenges."