Intel: +21% revenue in the third quarter, driven by a data center division and IA up 78%

Intel has achieved $16.5 billion in sales over the quarter, including $7.3 billion for its server chips, its strongest growth in this area in 15 years. However, forecasts for the end of the year are disappointing.

Intel reported quarterly results on October 29 that exceeded its own targets: $16.5 billion in revenue, 21% more than a year earlier, a gross margin of 43% and adjusted earnings per share of $0.52, more than double last year. The clear driver is the Data Center and AI division, whose sales jumped 78% to $7.3 billion, with about $3 billion in operating income. Management is talking about its strongest growth in servers in fifteen years, driven by demand for Xeon processors to run AI agent workloads.

A declining CP, a foundry still in deficit

The picture is more mixed elsewhere. The consumer arm, renamed Client Computing and Physical AI Group, fell 5% to $8.1 billion, and CFO David Zinsner expects the slowdown in the PC market to last at least until mid-2027. Intel Foundry rose 58% to $6.7 billion in revenue, but still lost nearly $1.9 billion in operations. CEO Lip-Bu Tan made it a priority to increase Xeon's production capacity, and Intel announced a multi-year collaboration with Oracle for future cloud instances built on the next generation of Xeon, codenamed Diamond Rapids.

The forecast for the fourth quarter, between $15 billion and $16 billion in sales with a gross margin reduced to around 38%, cooled investors despite this record quarter on the data center side. The group now has 81,100 employees, compared to 88,400 a year earlier.