Goldman Sachs: Intel’s third-quarter profit beats expectations, but fourth-quarter revenue and gross margin guidance weakens markedly

Which third-quarter results beat expectations?

Intel’s revenue for the third quarter of 2026 was 16.513 billion dollars, up 20.9% year over year, slightly above the market expectation of 16.419 billion dollars but below Goldman Sachs’ estimate of 17.027 billion dollars.
Gross margin excluding stock-based compensation was 44.1%, above the market expectation of 41.9%; earnings per share on the same basis were 0.52 dollars, also above the market expectation of 0.39 dollars. Revenue was broadly in line with market expectations, while profitability metrics beat by a wider margin.

Client Computing Group (CCG) revenue was 8.097 billion dollars, about 8.9% below the market expectation of 8.891 billion dollars; Data Center and AI (DCAI) revenue was 7.318 billion dollars, about 11.1% above market expectations.
Intel Foundry revenue was 6.697 billion dollars, about 12.1% above market expectations. Goldman Sachs believes that recent strength in server CPUs, continued momentum in advanced packaging and progress on advanced foundry nodes had made investor expectations relatively positive.

The midpoint of the company’s fourth-quarter revenue guidance was 15.5 billion dollars, about 8.9% below the market expectation of 17.018 billion dollars and below actual third-quarter revenue, implying an expected sequential revenue decline of about 6.1%.
Gross margin guidance excluding stock-based compensation was 38%, below the actual third-quarter figure of 44.1% and the market expectation of 42.5%; earnings per share guidance on the same basis was 0.25 dollars, versus a market expectation of 0.43 dollars.
Goldman Sachs expects the guidance, which was well below market expectations, to drive the share price down despite the solid third-quarter performance. The bank maintains a neutral rating on Intel and a 12-month price target of 150 dollars, based on normalized earnings per share of 5 dollars and a price-to-earnings multiple of 30.

Goldman Sachs is watching the outlook for advanced packaging, progress in external foundry business and updates on capital expenditure for 2026 to 2027, as well as changes in server CPU demand and market share and the trend in gross margin.
The bank sees better progress in foundry services, improvements in server CPU demand and market share, or stronger margin improvement as favorable factors; a slower-than-expected ramp of advanced foundry nodes or a decline in server CPU share would pose downside risks.