Intel forecast fourth-quarter revenue and margins above Wall Street estimates on Thursday, optimistic about a healthy rebound in personal computer sales, improvement in its data center business, and a growing lineup of customers seeking its manufacturing services.
While Intel remains under heavy competitive pressure from Nvidia (NVDA.O) in the data center chip market, the easing PC slump and stabilization of its server chip business helped raise gross margins faster than analysts had expected. The company’s executives had warned that it could take well into next year for margins to rise significantly.
Shares of the Santa Clara, California-based company rose 8% after the closing bell.
The company also has secured three customers for its chip contract manufacturing business, with Chief Executive Pat Gelsinger telling Reuters he expects to close a deal for a fourth customer before year’s end.
The decline in global PC shipments narrowed to 7% in the third quarter after double-digit percentage dips earlier this year, and the market is set to return to growth during the highly anticipated holiday season, analysts at research firm Canalys said.
The company forecast adjusted current-quarter revenue of about $14.6 billion to $15.6 billion, compared with an estimate of $14.35 billion according to LSEG data.
The company expects fourth-quarter adjusted profit per share of about 44 cents, above analysts’ estimate of 32 cents.
Heavy manufacturing investments to support Gelsinger’s turnaround plans have taken a toll on the company’s gross margin, which shrank to the mid-30s in the second quarter from over 60% in 2020. The adjusted gross margin came to 45.8% in the third quarter, compared with estimates of 42.7% according to LSEG data.
Gelsinger said in an interview that Intel has a fourth foundry customer for its advanced manufacturing process called “18A,” which it plans start producing in late 2024 and which it will offer to customers through its Intel Foundry Services business.
