Why were third-quarter results mixed?

  • Intel’s third-quarter 2026 revenue was 16.513 billion US dollars, up 2% quarter over quarter and 21% year over year, but approximately 0.25% below market consensus. Adjusted earnings per share were 0.52 US dollars, 0.11 US dollars above market consensus and 0.14 US dollars above the company’s previous guidance.
  • Adjusted gross margin was 44.1%, 2 percentage points above market consensus, helping profit performance outpace revenue. Over the same period, inventory rose from 12.492 billion US dollars in the previous quarter to 13.068 billion US dollars, and days of inventory increased from 121 to 129 days.

Can server growth offset PC weakness?

  • Third-quarter data center and AI revenue was 7.3 billion US dollars, up 17% quarter over quarter; PC-related revenue was 8.1 billion US dollars, down 9% quarter over quarter. The two businesses moved in opposite directions, narrowing the company’s overall sequential revenue growth to 2%.
  • Management said PC weakness is expected to persist through at least the first half of 2027. Meanwhile, demand for Xeon server processors is exceptionally strong, and the company’s current priority is to increase supply.
  • Foundry revenue was 6.7 billion US dollars, up 16% quarter over quarter. This figure includes intersegment sales and is not directly equivalent to revenue from external customers.

What do fourth-quarter guidance and cash flow show?

  • The company’s fourth-quarter 2026 revenue guidance was 15.5 billion US dollars, below the market consensus of 17.29 billion US dollars and Evercore ISI’s previous forecast of 18.322 billion US dollars.
  • Third-quarter operating cash flow was 5.1 billion US dollars, total capital expenditure was 4.2 billion US dollars, and adjusted free cash flow was 1.6 billion US dollars. These figures also included 847 million US dollars in net partner contributions and 48 million US dollars in government incentives. Partner contributions and government incentives are important context for understanding the quarter’s cash flow.

How does Evercore ISI view valuation and risks?

  • Evercore ISI assigned Intel an outperform rating and a 133 US dollar price target. The firm applied a price-to-earnings multiple of 30 to its estimated 2030 earnings per share of 6.50 US dollars, then discounted the result back four years at a rate of 10%.
  • The firm believes better-than-expected foundry costs, process technology or customer progress could provide upside. Weaker-than-expected adoption of server CPUs in agentic AI, intensifying data center competition, and competition from TSMC in the United States could create downside pressure.