Shares of Intel Corp (NASDAQ:INTC) climbed in early trading on Friday, after the company reported upbeat third-quarter results.
Here are some key analyst takeaways:
- Rosenblatt Securities analyst Kevin Cassidy reiterated a Sell rating, and raisd the price target from $14 to $25.
- Wedbush analyst Matt Bryson maintained a Neutral rating, while lifting the price target from $20 to $30.
- Benchmark analyst Cody Acree reaffirmed a Buy rating, while taking the price target higher from $43 to $50.
- BofA Securities analyst Vivek Arya maintained an Underperform rating and a $34 price target.
- Needham analyst Quinn Bolton reiterated a Hold rating on the stock.
Check out other analyst stock ratings.
Rosenblatt Securities: Intel made "solid progress" in the third quarter. Cassidy noted balance sheet improvements, rising client and server CPU demand and ongoing cost reductions. The company reported revenues of $13.7 billion, beating consensus of $13.2 billion, he added.
Core market demand strengthened revenues "with AI adoption continuing to fuel renewed growth in traditional compute segments such as cloud and edge," the analyst stated. The midpoint of management's fourth-quarter revenue guidance of $13.3 billion came in above consensus of $13.4 billion, he further stated.
Wedbush: Better-than-expected demand for PC and server CPUs drove Intel's revenue and margin beats. The company note it was unable to meet customer demand, Bryson said. Management's fourth-quarter guidance ex-Altera also exceeded consensus, while Intel expects a mix shift towards server CPUs, he added.
The analyst expressed concern around the sustainability of the better demand trends beyond the next few quarters. He stated, however, that management's tone was much more constructive about the progress with future manufacturing and chip design endeavors, "which remain the primary factors that are likely to dictate Intel’s longer-term performance in our view."
Benchmark: Intel delivered its fourth consecutive quarter of upside to guidance and "its first return to profitability after six consecutive quarters of GAAP losses," Acree said. The performance was driven by customer demand outstripping supply due to the growth of AI infrastructure spending, the adoption of AI PCs and the better-than-expected customer transition to Windows 11, he added.
"The earnings beat was largely driven by the company's 40% gross margin, which improved 22% Y/Y, 10% Q/Q, and was 4% above estimates and its original guidance," the analyst wrote. Intel expects to be unable to fully meet compute demand into 2026.
BofA Securities: Intel's third-quarter sales beat expectations by 4%, and it raised its fourth-quarter outlook by 3%, Arya said. The company highlighted that demand exceeds supply and that this could continue into next year, he added.
The analyst stated, however, that Intel continues to face challenges, including:
- Gross margin pressure
- Tough competition in both Products and Foundry
- Subscale manufacturing with no large external customer wafer order
- Lack of an AI accelerator
Needham: Mix will be "the largest swing factor" in Intel's gross margins going ahead, Bolton said. The company projects its gross margin at 36.5% for the fourth quarter, with a sequential decline of 350 basis points (bps) due to:
- The lack of Altera revenue
- The ramp of 18A wafers
- Products like Lunar Lake and Arrow Lake are being driven to "help support PC customers as it moves capacity of Intel 10 and 7 away from PC customers to DC customers."
Tight capacity, which prevented Intel from fully meeting demand in the third quarter, is likely to continue, the analyst stated.
INTC Price Action: Shares of Intel had risen by 1.56% to $38.76 at the time of publication on Friday.
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