Good news for Intel! Q3 revenue and Q4 performance guidance exceeded expectations, with AI and data centers becoming the main drivers

On October 31st Eastern Time, Intel released its third quarter financial report for the 2024 fiscal year. The company's revenue for the third quarter was $13.3 billion, exceeding analysts' expectations, but a 6% decrease from the previous quarter's $14.2 billion. Intel predicts that fourth quarter revenue will reach $13.3 billion to $14.3 billion, while analysts tracked by FactSet expect it to be $13.7 billion. The performance growth exceeded expectations, triggering optimistic market expectations that the company can recover more lost ground. Intel's stock price rose 12% after releasing its third quarter report. Intel announced in a subsequent statement that as of September 28th, the company had a net loss of $16.99 billion in the third quarter, compared to Intel's net profit of approximately $300 million in the same period last year. As part of its cost cutting plan, Intel confirmed $2.8 billion in restructuring expenses and $15.9 billion in impairment charges for this quarter. The restructuring expenses have had a significant impact on our profitability in the third quarter as we take important steps towards our cost reduction goals, "said David Zinsner, Intel's Chief Financial Officer. In terms of revenue from segmented businesses, Intel Client Computing Group (including PC chips for desktops and laptops) saw a 7% decrease in revenue to $7.3 billion in the third quarter. This quarter, Intel continues to lead the development of the AI PC industry and is expected to ship over 100 million AI PCs by the end of 2025. In September, Intel launched the Intel Core Ultra 200V series processors codenamed Lunar Lake, which provide longer battery life and improvements in performance, graphics, and AI. Intel announced plans to collaborate with AMD to create an x86 ecosystem consulting group, bringing together leaders from across the industry to help shape the future of x86. The ecosystem consulting group focuses on simplifying software development, ensuring interoperability and interface consistency among suppliers, and providing standard architecture tools and instructions for developers. Broadcom, Dell, Google, HPE, HP Inc., Lenovo, Meta, Microsoft, Oracle, and Red Hat have signed on as founding members.
It is worth noting that the revenue of Intel's data center division, including artificial intelligence chips, increased by 9% to $3.3 billion, higher than analysts' expectations of $3.16 billion. Network and edge revenue increased by 4% to $1.5 billion. This quarter, Intel launched the Xeon 6 energy-efficient core processor, which doubled performance by increasing the number of cores, memory bandwidth, and embedded AI acceleration. Intel also launched the Intel Gaudi ® 3 AI accelerators, with twice the network bandwidth and 1.5 times the memory bandwidth of their predecessors, can improve the efficiency of large language models. IBM and Intel have announced a global partnership to deploy the Intel Gaudi 3 AI Accelerator as a service on IBM Cloud.
Intel's foundry business is in a period of steady development, with third quarter revenue of $4.35 billion. Compared to the revenue of $4.7 billion in the third quarter of 2023, it decreased by 8%. Intel CEO Pat Kissinger stated during the earnings conference call that its advanced 18A node will begin mass production in the second half of 2025, and most of the products produced on this node will be manufactured by Intel.
Intel is optimistic about the performance growth in the fourth quarter, and expects the adjusted gross profit margin to rebound to 39.5%. Detrick from Carson Group said, "Both the product and OEM business have performed well, and for this struggling company, the overall performance this quarter has been good