Intel (INTC.US) Q3 net profit fell 18% year on year, PC business continued to weaken, and stock prices plummeted more than 21% after the market

The Zhitong Finance App learned that after the US stock market closed on Thursday, Intel (INTC.US) announced financial results for the third quarter of 2026, and the stock price fell more than 21% after the market. According to the data, the company's quarterly revenue reached US$16.513 billion, up 21% from US$13.653 billion in the same period last year; GAAP net profit was US$3.32 billion, down 18% from US$4,063 billion in the same period last year; and diluted earnings per share were US$0.6, down from US$0.9 in the same period last year.

After adjustments, Intel's third-quarter non-GAAP net profit reached US$2,756 billion, up 169% from US$1,023 million in the same period last year; non-GAAP diluted earnings per share were US$0.52, up 126% from US$0.23 in the same period last year.

In terms of profitability, Intel's GAAP gross margin for the third quarter was 43%, up from 38.2% in the same period last year, up 4.8 percentage points; non-GAAP gross margin was 44.1%, up from 40% in the same period last year.

At the same time, the company's GAAP operating profit reached US$2,522 million, an increase of about 269% over US$683 million in the same period last year; the operating profit margin rose to 15.3% from 5% in the same period last year.

Intel's chief financial officer David Zinsner said that third-quarter revenue, gross margin, and earnings per share all exceeded the company's previous guidelines, and the data center business achieved the strongest revenue growth in 15 years.

Data center and AI business revenue surged 78%, strong demand for server processors

By business, the data center and artificial intelligence (DCAI) business became Intel's most prominent growth driver in the third quarter. According to financial reports, DCAI's third-quarter revenue reached US$7.318 billion, an increase of 78% over US$4.117 billion in the same period last year, the strongest growth performance in 15 years.

At the same time, DCAI's operating profit reached US$3,039 million, an increase of about 215% over US$964 million in the same period last year, showing that the increase in demand for server processors contributed significantly to business profitability.

Intel CEO Chen Liwu said that despite short-term headwinds in the PC industry, market demand for Intel CPUs is still strong, further strengthening the company's confidence in long-term growth opportunities.

He pointed out that Intel's top priority right now is to expand its supply capacity to meet the strong market demand for Xeon (Xeon) series server processors while continuing to improve its product portfolio and technology roadmap.

In the field of enterprise computing, Intel announced a multi-year partnership with Oracle to expand the computing capabilities of the Oracle (ORCL.US) cloud infrastructure (OCI) based on Intel Xeon processors. The partnership will cover existing and future Xeon platforms, including OCI X14 products planned to use the next generation of Diamond Rapids server processors.

Additionally, Intel revealed technical details of the next-generation GPU D series. The series, previously codenamed Crescent Island, is mainly aimed at efficient AI inference applications.

PC business revenue fell 5%. Management expects weakness to continue until the first half of next year

In contrast to the data center business, Intel's PC-related business is still under demand pressure. In the third quarter, Intel's Client Computing and Physical Artificial Intelligence Business (CCPG) revenue was US$8,097 billion, down 5% from US$8.535 billion in the same period last year. The operating profit of this business was US$2,885 billion, down from US$2,694 million in the same period last year, and a year-on-year decrease of about 15%.

Intel's chief financial officer Zinsner said it is expected that the PC market's slowdown will continue until at least the first half of 2027. However, the company remains optimistic about the growth opportunities brought by the broader product portfolio and plans to increase product supply capacity through disciplined investment in production capacity and working capital to support future growth.

In terms of client products, Intel announced the launch of the first batch of Googlebook devices equipped with Core Ultra Series 3 processors. Related high-end products will be launched by Acer, Asus, and Lenovo.

The company is also collaborating with AMD to integrate PyTorch optimization for x86 CPUs into OneDNN to simplify the development and deployment of AI applications on Intel and AMD processors.

Foundry business revenue increased 58% but still lost $1,853 million

In terms of the foundry business, Intel's Foundry division's revenue in the third quarter reached US$6.697 billion, up 58% from US$4.235 billion in the same period last year. However, the division is still in a state of loss. The operating loss for the third quarter was US$1,853 million, which is narrower than the loss of US$2,321 billion in the same period last year.

It is important to note that revenue disclosed by Intel's Foundry division includes intra-group transactions and cannot be directly considered foundry sales revenue to external customers.

In terms of technological progress, Intel said that the company released the 0.9 process design kit (PDK) for the Intel 14A process in October to further advance the development of next-generation advanced process technology.

Additionally, Intel announced a partnership with ASML.US (ASML.US) to accelerate preparations for the industrialization of high-numerical aperture extreme ultraviolet lithography (High-NA EUV) manufacturing technology. The company is also cooperating with Lens Technology to combine Intel's advanced packaging technology with precision glass processing capabilities to promote the development of advanced semiconductor packaging technology for the AI era.

Operating profit increased by about 269% year on year, but net profit decreased by 18%

Notably, despite significant improvements in Intel's core business profitability in the third quarter, GAAP net profit declined year over year. According to financial reports, the company's GAAP operating profit for the third quarter increased from US$683 million in the same period last year to US$2,522 million, an increase of about 269%. However, GAAP net profit attributable to Intel fell from US$4,063 billion in the same period last year to US$3.32 billion, a year-on-year decrease of 18%.

This difference is mainly related to year-on-year changes in non-operating income.

Intel's third-quarter interest and other net income was $1,130 million, significantly lower than the $3.67 billion in the same period last year. Furthermore, GAAP results for the same period in 2025 were also affected by projects such as earnings related to asset divestments, which raised the comparative base.

In contrast, after excluding related non-operating items and other adjustments, Intel's third-quarter non-GAAP net profit increased 169% year over year, reflecting an improvement in core business profitability.

Operating cash flow reached US$5.1 billion and completed US$23 billion stock issuance

In terms of cash flow, Intel's operating cash flow in the third quarter reached US$5.082 billion, up from US$2,546 billion in the same period last year, and an increase of about 100% over the previous year. The company's total capital expenditure for the third quarter was US$4.219 billion, up from US$2,956 billion in the same period last year.

According to the adjusted free cash flow caliber disclosed by Intel, the adjusted free cash flow for the third quarter reached US$1,639 million, an increase of about 83% over US$896 million in the same period last year.

In terms of balance sheet, as of September 26, 2026, Intel held cash and cash equivalents of US$21.846 billion and short-term investments of US$32.159 billion, totaling approximately US$54.05 billion.

Additionally, Intel announced that it has completed a $23 billion public stock offering to support future growth opportunities while maintaining a solid balance sheet and investment-grade credit rating.

Fourth-quarter revenue of $15 billion to $16 billion and gross profit margin is expected to decline

Looking ahead to the fourth quarter of 2026, Intel expects revenue to be between $15 billion and $16 billion. The company expects GAAP gross margin of approximately 37.1% and non-GAAP gross margin of approximately 38.0% for the fourth quarter, all significantly lower than 43.0% and 44.1% for the third quarter.

In terms of earnings, Intel expects earnings per diluted GAAP share of $0.10 and non-GAAP diluted earnings of $0.25 per share for the fourth quarter. According to the median revenue guide, Intel expects revenue for the fourth quarter to be around US$15.5 billion, down from US$16.513 billion for the third quarter.

Intel also estimates GAAP operating expenses for the fourth quarter to be approximately US$4.9 billion and non-GAAP operating expenses to be approximately US$4.4 billion.

Chen Liwu said that the company is improving execution efficiency, expanding supply capacity, and continuing to advance process technology development. Intel will continue to enhance its product roadmap to seize long-term growth opportunities and create sustainable value for shareholders.