Intel just delivered its first earnings report since the U.S. government became a major shareholder, beating revenue estimates with $13.65 billion against the $13.14 billion expected. The chipmaker's stock jumped 6% in after-hours trading as demand for its core x86 PC processors showed clear signs of recovery, marking a pivotal moment for the company's government-backed turnaround.
Intel just proved the government made the right bet. The chipmaker's third-quarter earnings, released Thursday evening, showed revenue of $13.65 billion - comfortably beating the $13.14 billion analysts expected and sending shares up 6% in extended trading.
This marks Intel's first quarterly report since the Trump administration negotiated an $8.9 billion investment in August, purchasing 433.3 million shares at $20.47 per share. The government's stake fundamentally changes Intel's shareholder structure, though it created some unusual accounting headaches that CEO Lip-Bu Tan acknowledged during the earnings call.
"We are fully committed to advancing the Trump administration's vision to restore semiconductor production and proudly welcome the US government as an essential partner in our efforts," Tan told investors, according to CNBC's earnings coverage.
The real story isn't just the government money - it's that Intel's core business is actually recovering. The company's Client Computing Group, which makes processors for PCs and laptops, generated $8.5 billion in revenue as part of the broader $12.7 billion products group sales. More importantly, Intel says chip demand is outpacing supply, a trend expected to continue through next year.
This supply constraint represents a dramatic turnaround for a company that was struggling to compete against AMD in recent years. The PC market's recovery, driven partly by AI-enhanced laptops and corporate refresh cycles, is giving Intel breathing room to execute its broader strategy.
But Intel's transformation story got more complex in September when former rival Nvidia invested $5 billion in the company. The partnership will integrate Intel's central processors with Nvidia's AI graphics chips, which dominate 90% of the AI processor market. For Intel, this represents a chance to revive its struggling data center CPU business, which posted $4.1 billion in sales but declined 1% year-over-year.
The Nvidia deal also highlights Intel's strategic pivot. Rather than trying to compete head-to-head in AI chips, Intel is positioning itself as the foundational computing layer that enables AI workloads. It's a pragmatic approach that plays to Intel's manufacturing strengths while acknowledging Nvidia's AI dominance.
Intel's foundry business remains the biggest question mark. The division, which manufactures chips for external customers, reported $4.2 billion in revenue - but all of that came from Intel's own chip orders. The foundry needs external customers to justify its $100 billion capital investment requirement, and securing major clients remains elusive.
The company did announce it started production of its most advanced 18A process chips in Arizona during the quarter, representing progress on the manufacturing front. But without big-name foundry customers like Apple or Qualcomm, Intel's foundry strategy remains unproven.
Financially, Intel reported net income of $4.1 billion, or 90 cents per share, versus a $16.6 billion loss in the same quarter last year. The dramatic swing reflects both operational improvements and the $5.7 billion Intel received from the government during the quarter. However, the company warned that accounting for the government's unusual equity structure lacks precedent and may require result revisions pending SEC guidance.
Intel's workforce continues shrinking as part of its efficiency drive, dropping to 88,400 employees from 124,100 a year ago. These cuts, while painful, are helping Intel preserve cash for its foundry investments and R&D spending.
Looking ahead, Intel expects Q4 revenue of $13.3 billion at the midpoint with adjusted earnings of 8 cents per share. The guidance excludes impacts from selling its Altera subsidiary, suggesting Intel is streamlining operations to focus on core competencies.
Intel's Q3 beat represents more than just good numbers - it validates the government's bet on American semiconductor manufacturing and shows the company's core PC business is genuinely recovering. The Nvidia partnership adds strategic optionality while the foundry business remains a longer-term wildcard. With demand outpacing supply and government backing secured, Intel has the runway to execute its turnaround. The question now is whether it can convert foundry investments into external customers and maintain PC market momentum as AI reshapes computing.
