According to Zhitong Finance APP, after the close of trading on Thursday, Intel (INTC.US) reported its third-quarter fiscal year 2026 earnings, causing its stock to drop more than 21% in after-hours trading. The data showed that the company’s revenue for the quarter reached $16.513 billion, a 21% increase from $13.653 billion in the same period last year; GAAP net profit was $3.32 billion, down 18% from $4.063 billion in the prior-year quarter; and diluted earnings per share were $0.60, below $0.90 in the same period last year.
After adjustments, Intel's non-GAAP net profit for the third quarter reached $2.756 billion, a 169% increase compared to $1.023 billion in the same period last year; non-GAAP diluted earnings per share were $0.52, up 126% from $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, an increase of 4.8 percentage points; the non-GAAP gross margin was 44.1%, up from 40% in the same period last year.
Meanwhile, the company's GAAP operating profit reached $2.522 billion, an increase of approximately 269% compared to $683 million in the same period last year; the operating margin rose from 5% in the prior-year period to 15.3%.
Intel's CFO, David Zinsner, stated that revenue, gross margin, and earnings per share for the third quarter all exceeded the company's previous guidance, with the data center business achieving its strongest revenue growth in 15 years.
Data center and AI business revenue surged 78%, driven by strong demand for server processors.
Looking at individual businesses, the Data Center and AI (DCAI) segment emerged as Intel’s strongest growth driver in the third quarter. Financial results showed that DCAI revenue reached $7.318 billion in the third quarter, a 78% increase from $4.117 billion in the same period last year, marking the strongest growth in 15 years.
Meanwhile, the operating profit from the DCAI business reached $3.039 billion, representing a 215% increase compared to $964 million in the same period last year, highlighting the significant positive impact of growing demand for server processors on business profitability.
Intel CEO Chen Liwu stated that, despite short-term headwinds in the PC industry, demand for Intel CPUs remains strong, further bolstering the company’s confidence in long-term growth opportunities.
He noted that Intel's current priority is to expand its supply capacity to meet strong market demand for Xeon server processors, while continuing to refine its product portfolio and technology roadmap.
In the enterprise computing sector, Intel has announced a multi-year partnership with Oracle to expand Oracle's (ORCL.US) cloud infrastructure (OCI) computing capabilities based on Intel Xeon processors. The collaboration will cover current and future Xeon platforms, including OCI X14 products planned to adopt Intel’s next-generation Diamond Rapids server processors.
In addition, Intel has disclosed technical details of its new D-series GPUs, previously codenamed Crescent Island, which are primarily designed for efficient AI inference workloads.
PC business revenue decreased by 5%. Management expects the weakness to persist until the first half of next year.
In contrast to its data center business, Intel’s PC-related business continues to face demand pressures. In the third quarter, Intel’s Client Computing and Physical AI Group (CCPG) revenue amounted to $8.097 billion, a 5% decline from $8.535 billion in the same period last year. Operating profit for this segment was $2.285 billion, down from $2.694 billion in the prior-year period, representing a year-over-year decrease of approximately 15%.
Intel CFO Zinsner stated that the slowdown in the PC market is expected to persist at least until the first half of 2027. However, the company remains optimistic about growth opportunities across its broader product portfolio and plans to enhance product supply capabilities through disciplined investments in capacity and working capital to support future growth.
On the client product side, Intel announced the first Googlebook devices featuring Core Ultra Series 3 processors, with premium models to be launched by Acer, ASUS, and Lenovo.
The company also collaborated with AMD to integrate PyTorch optimizations for x86 CPUs into oneDNN, simplifying the development and deployment of AI applications on both Intel and AMD processors.
Wafer manufacturing revenue increased by 58%, but the company still incurred a loss of $1.853 billion.
In its foundry business, Intel's Foundry segment generated revenue of $6.697 billion in the third quarter, a 58% increase compared to $4.235 billion in the same period last year. However, the segment still incurred a loss, with an operating loss of $1.853 billion in the third quarter, narrowing from a loss of $2.321 billion in the same period last year.
Note that the revenue disclosed by Intel's Foundry division includes intra-group transactions and cannot be directly regarded as wafer foundry sales revenue from external customers.
On the technological front, Intel announced that it released version 0.9 of the process design kit (PDK) for its Intel 14A process in October, further advancing the development of its next-generation advanced process technology.
In addition, Intel announced a collaboration with ASML.US to accelerate the industrialization readiness of High-NA EUV lithography manufacturing technology. The company also partnered with Lens Technology to advance next-generation semiconductor packaging technologies for the AI era by combining Intel’s advanced packaging solutions with precision glass processing capabilities.
Operating profit increased by approximately 269% year-over-year, but net profit decreased by 18%.
Notably, despite a significant improvement in the profitability of Intel's core business in the third quarter, its GAAP net income declined year-over-year. The financial report showed that Intel’s GAAP operating income for the third quarter rose to $2.522 billion from $683 million in the same period last year, an increase of approximately 269%. However, GAAP net income attributable to Intel decreased to $3.32 billion from $4.063 billion in the prior-year period, representing an 18% year-over-year decline.
This difference is primarily related to the year-over-year change in non-operating income.
Intel's net interest and other income for the third quarter was $1.13 billion, significantly lower than $3.67 billion in the same period last year. Additionally, GAAP results for the same period in 2025 were inflated by items such as gains from asset disposals, raising the comparison base.
In comparison, after excluding relevant non-operating items and other adjustments, Intel's non-GAAP net profit for the third quarter increased by 169% year-over-year, reflecting improved profitability in its core business.
Operating cash flow reached $5.1 billion; completed a $23 billion stock offering.
In terms of cash flow, Intel's operating cash flow for the third quarter reached $5.082 billion, up from $2.546 billion in the same period last year, representing a year-over-year increase of approximately 100%. The company's total capital expenditures for the third quarter amounted to $4.219 billion, compared to $2.956 billion in the same period last year.
According to Intel's adjusted free cash flow definition, adjusted free cash flow for the third quarter reached $1.639 billion, an increase of approximately 83% compared to $896 million in the same period last year.
On the balance sheet, as of September 26, 2026, Intel held $21.846 billion in cash and cash equivalents and $32.159 billion in short-term investments, totaling approximately $54.005 billion.
In addition, Intel announced the completion of a $23 billion public stock offering to support future growth opportunities while maintaining a strong balance sheet and investment-grade credit rating.
Revenue for the fourth quarter is expected to range from $15 billion to $16 billion, with gross margin declining.
Looking ahead to the fourth quarter of 2026, Intel expects revenue to range between $15 billion and $16 billion. The company anticipates a GAAP gross margin of approximately 37.1% and a non-GAAP gross margin of approximately 38.0% for the quarter, both significantly lower than the third quarter's 43.0% and 44.1%, respectively.
In terms of profitability, Intel expects fourth-quarter GAAP diluted earnings per share of $0.10 and non-GAAP diluted earnings per share of $0.25. Based on the midpoint of its revenue guidance, Intel anticipates fourth-quarter revenue of approximately $15.5 billion, down from $16.513 billion in the third quarter.
Intel also expects GAAP operating expenses of approximately $4.9 billion and non-GAAP operating expenses of approximately $4.4 billion for the fourth quarter.
Chen Liwu stated that the company is improving execution efficiency, expanding supply capacity, and continuously advancing process technology development. Intel will continue to strengthen its product roadmap to capture long-term growth opportunities and create sustainable value for shareholders.