Intel Surpasses Q3 Expectations Amid Restructuring

Cost cuts and strategic investments help Intel beat profit forecasts and regain investor confidence.

Intel has reported stronger-than-expected third-quarter earnings, driven by aggressive cost-cutting measures and a wave of strategic investments. CEO Lip-Bu Tan’s restructuring efforts have helped stabilize the company’s finances following a challenging period marked by declining market share and manufacturing setbacks. The results mark Intel’s first earnings release since securing funding from SoftBank, Nvidia, and the U.S. government, with shares rising 7% in after-hours trading. While Nvidia’s investment is still pending, the financial boost has already improved Intel’s market performance.

Financial Recovery and Strategic Funding

Intel’s adjusted profit reached 23 cents per share, far exceeding analysts’ expectations of just 1 cent. Gross margins also improved to 40%, beating the projected 35.7%. The company received $2 billion from SoftBank during the quarter, while Nvidia’s $5 billion investment and the U.S. government’s $8.9 billion stake are expected to follow. These funds are seen as critical to Intel’s turnaround, especially as it continues to compete with AMD and struggles to gain traction in the AI chip market.

The company’s stock, which fell 60% last year, has rebounded nearly 90% in 2025, outperforming Nvidia’s gains. Intel also sold a 51% stake in Altera to Silver Lake, streamlining its portfolio. CFO Dave Zinsner noted that demand for Intel’s chips was strong enough to create supply constraints, particularly in data centers upgrading CPUs to support AI workloads. Despite these gains, challenges remain in manufacturing yields, especially with the 18A process not expected to reach industry standards until 2027.

Operational Restructuring and Market Strategy

Intel plans to end the year with a workforce over 20% smaller than in 2024, reflecting Tan’s efforts to reduce overhead. The company has scaled back former CEO Pat Gelsinger’s ambitious manufacturing expansion, which led to Intel’s first annual loss since 1986. A newly formed central engineering group will focus on internal chip design and custom solutions for external clients, positioning Intel to compete with firms like Broadcom and Marvell. These changes aim to improve efficiency and align Intel’s offerings with evolving market demands.

Tan’s leadership has shifted Intel’s strategy from broad expansion to targeted innovation and financial discipline. The company forecasts fourth-quarter revenue between $12.8 billion and $13.8 billion, with capital expenditures expected to rise to $27 billion in 2025. While manufacturing yields remain a concern, Intel’s improved margins and investor optimism suggest that its restructuring is beginning to pay off. Continued focus on AI integration and custom chip design will be key to sustaining momentum.

AI Demand and Competitive Positioning

Intel’s chips are increasingly used in data centers supporting advanced AI applications, prompting upgrades to CPUs for better performance. Zinsner described the supply shortage as a “high-class problem,” indicating strong demand despite production challenges. The company’s 18A manufacturing node is central to its future competitiveness, though current yields are below expectations. Industry analysts believe that Intel’s ability to deliver reliable performance in AI-related workloads will determine its long-term success.

The company’s efforts to streamline operations and attract strategic funding have helped restore investor confidence. While Intel still faces stiff competition in the AI chip market, its improved financials and focused strategy offer a more stable foundation. The next phase will depend on execution, particularly in manufacturing and product innovation. Investors will be watching closely as Intel navigates the evolving semiconductor landscape.