On Thursday, Intel shares rebounded despite a significantly sharper-than-expected third-quarter loss as the upbeat foundry outlook fueled investor optimism.
The California-headquartered firm’s stock shed 3.50% to $21.52 apiece on October 31 but recovered by a 6.92% to $23.01 on extended trading. Analysts predict the upward momentum will continue with a 1.78% jump to $23.42 per share in the following market session.
In the September quarter, Intel reported adjusted loss per share of $0.46, far worse than the Wall Street consensus shortfall $0.02 apiece. The figure also marked a stark quarter-over-quarter (QoQ) reversal from the $0.02 EPS in the second quarter.
In contrast, consolidated revenues of $13.28 billion slightly exceeded industry forecasts of $13.02 billion. This reading also represented moderate QoQ growth from $12.83 billion during the same period last year.
Intel disclosed a Q3 net loss of $16.60 billion before factoring losses stemming from certain non-controlling interests, alarming stakeholders. In comparison, the chipmaker earned a net income of $300.00 million in last year’s July-September period.
Fortunately, investor sentiment shifted after CEO Pat Gelsinger upwardly revised the Q4 revenue guidance to a median of $13.80 billion, above the analysts’ estimate of $13.66 billion. Gelsinger added that he expects traditional server chip demand to rump up through the year-end, especially for Intel’s data-center semiconductors.
Foundry Optimism Buoys Intel Investor Sentiment
Next year, Intel plans to convert its foundry business into a separate subsidiary to open it up for external investment. The move aligns with the tech giant’s strategic shift toward diversifying revenue cementing its position as a major player in chip manufacturing.
In recent months, the CPU-maker reinforced its foundry segment by finalizing securing custom chip manufacturing contracts with Amazon Web Services and Microsoft. Intel has also been working on a deal with Broadcom, though recent test runs fell short of expectations.
Lastly, Intel looks to expand production of its second-generation Core Ultra laptop chips to better stand its ground against Arm-based processors. The company is also set to receive $8.50 billion in funding under the Chips and Science Act to help upgrade its foundry capabilities.
