INTC Stock: Intel Corporation (NASDAQ: INTC) shares rallied after hours on Thursday, surging up to 12% following an earnings report that beat Wall Street expectations for revenue and offered an optimistic Q4 outlook. The company’s Q3 results reflected challenges, with substantial restructuring and impairment charges, but investor sentiment rose on a robust forecast and strength in Intel’s data center and AI businesses.

Q3 Earnings Highlights

Intel reported a net loss of $16.99 billion, or $3.88 per share, compared to $310 million, or 7 cents per share, in Q3 last year. Adjusted earnings came in at 17 cents per share, significantly beating analyst expectations of a 2-cent loss. Revenue was $13.28 billion, exceeding the consensus estimate of $13.02 billion, despite a 6% year-over-year decline.

The tech giant incurred $15.9 billion in impairment charges, linked to accelerated depreciation of manufacturing assets and goodwill impairments in the Mobileye unit, as part of a sweeping restructuring plan. CEO Pat Gelsinger shared that Intel is undergoing one of its most extensive restructuring processes since its founding, aimed at optimizing operations and realigning resources.

Intel’s board recently approved further cost-cutting measures, including workforce reductions of 16,500 employees by the end of 2025, to improve its financial position amid market challenges.

Segment Performance and Guidance Lift

In Q3, Intel’s Client Computing Group, which generates the bulk of revenue through PC chip sales, reported $7.3 billion, slightly below analyst expectations but down 7% from last year. The segment faced ongoing inventory adjustments as customers worked through supply chain disruptions but is expected to stabilize in the coming quarters.

Intel’s Data Center and AI Group, however, delivered a notable upside with revenue at $3.35 billion, beating the $3.17 billion forecast and showing a 9% increase year-over-year. The momentum in this segment is expected to continue, driven by Intel’s recent Xeon 6 processor launch and Gaudi AI accelerators, despite Gaudi’s slower-than-anticipated uptake.

For Q4, Intel raised guidance with expected revenue between $13.3 billion and $14.3 billion, above analyst projections of $13.66 billion, and adjusted earnings per share of 12 cents, outpacing the anticipated 8 cents.

Intel’s Future and Foundry Ambitions

Intel aims to turn its foundry business into a separate subsidiary to allow for outside investment. This strategic shift is part of Intel’s goal to diversify revenue and solidify its position as a competitive player in chip manufacturing.

In recent months, Intel has bolstered its foundry division by securing major contracts with Amazon Web Services (AWS) and Microsoft for custom chip manufacturing. However, challenges remain as test runs with potential clients, including Broadcom, fell short of expectations.

Amid fierce competition from rivals like AMD and Qualcomm, Intel has made strides to reassert itself in the PC market. The recent launch of its second-generation Core Ultra laptop chips, optimized for AI and power efficiency, aims to enhance Intel’s position against Arm-based processors, especially with Apple’s shift to in-house chip designs.

Stock Performance and Market Response

While Intel’s stock has seen a steep decline of approximately 57% year-to-date, Thursday’s upbeat earnings report provided a temporary lift. With restructuring in progress and a positive Q4 forecast, Intel’s stock may see further momentum as the company realigns to better capture growth in AI and data center technologies.

For investors and analysts, the Q4 guidance is a promising signal that Intel’s strategic initiatives could bear fruit as the company targets long-term resilience in a challenging semiconductor landscape.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor or conduct your own research before making investment decisions.