Date: October 23, 2025 | Source: Motley Fool (fool.com) Intel Q3 2025 Earnings Call Transcript
Participants:Lip-Bu Tan (CEO), David Zinsner (CFO), John Pitzer (Executive VP, Corporate Strategy/IR).
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Lip-Bu Tan, CEO: Thank you, John, and let me add my welcome this afternoon. We delivered a solid Q3 with revenue, gross margin, and earnings per share above guidance. This marks the fourth consecutive quarter of improved execution, delivered by the underlying growth in our core markets and the steady progress we are making to rebuild the company.
We significantly improved our cash position and liquidity in Q3, a key focus for me since becoming CEO in March. This includes accelerated funding from the United States government, important investments from NVIDIA and SoftBank Group, and monetizing a portion of Altera and Mobileye.
AI is clearly accelerating demand for new compute architectures, hardware, models and algorithms. At the same time, it's fueling renewed growth of traditional compute. Our collaboration with NVIDIA is a prime example — by connecting our architectures through NVIDIA NVLink, we combine Intel CPU and x86 leadership with NVIDIA's unmatched AI and accelerated computing strengths.
In client, we are on track to launch our first Panther Lake SKU by year-end, followed by additional SKUs in the first half of next year. In traditional servers, AI workloads are driving both refresh of the installed base and capacity expansion, fueled by rapid growth in tokenization. We remain the AI head node of choice, with strong demand for Granite Rapids across every major hyperscaler.
On Intel Foundry, our momentum continues. We are making steady progress on Intel 18A and are on track to bring Panther Lake to market this year. Intel 18A yields are progressing at a predictable rate, and Fab 52 in Arizona, dedicated to high-volume manufacturing, is now fully operational. On Intel 14A, we remain actively engaged with potential external customers and are encouraged by the early feedback.
David Zinsner, CFO: In Q3, we delivered the fourth consecutive quarter of revenue above our guidance, driven by continued strength in our core markets. Third-quarter revenue was $13.7 billion, coming in above the high end of our guidance range and up 6% sequentially. Capacity constraints, especially on Intel 10 and Intel 7, limited our ability to fully meet demand in Q3 for both data center and client products.
Non-GAAP gross margin was 40%, four percentage points better than our guidance, on higher revenue, a more favorable mix, and lower inventory reserves. We delivered Q3 EPS of 23 cents versus our guidance of breakeven, driven by higher revenue, stronger gross margin, and continued cost discipline. Q3 operating cash flow was $2 billion, with gross CapEx of $3 billion, and positive adjusted free cash flow of $900 million.
We exited Q3 with $30.9 billion of cash and short-term investments. In Q3, we received $5.7 billion from the US government, $2 billion from SoftBank Group, $4.3 billion from the Altera closure, and $900 million from the Mobileye stake sale. We expect NVIDIA's $5 billion investment to close by Q4. Finally, we repaid $4.3 billion of debt in the quarter.
Intel Products revenue was $12.7 billion, up 7% sequentially and above our expectations across client and server. CCG revenue was $8.5 billion, up 8% quarter over quarter, on a seasonally stronger TAM, Windows 11-driven refresh, and a stronger pricing mix with the ramp of Lunar Lake and Arrow Lake. DCAI revenue was $4.1 billion, up 5% sequentially, above expectations driven by improved product mix and higher enterprise demand. Intel Products operating profit was $3.7 billion, 29% of revenue, up $972 million quarter over quarter.
Intel Foundry delivered revenue of $4.2 billion, down 4% sequentially, delivered Intel 10 and 7 volume above expectations, and met key 18A milestones. Intel Foundry's operating loss in Q3 was $2.3 billion, better by $847 million sequentially on favorable comparison to the Q2 impairment. All Other revenue came in at $1 billion, of which Altera contributed $386 million.
For Q4, we're forecasting a revenue range of $12.8 billion to $13.8 billion. At the midpoint of $13.3 billion, we forecast a gross margin of approximately 36.5%, a tax rate of 12%, and EPS of 8 cents, all on a non-GAAP basis. We continue to anticipate 2025 gross capital investment of approximately $18 billion.
Ross Seymore (Deutsche Bank): What's giving you more confidence on foundry, and what are the pluses and minuses for gross margin into 2026?
Lip-Bu Tan: We made tremendous progress on 18A — yields are progressing at a predictable rate, Fab 52 is fully operational, and Panther Lake depends on it. On 14A, we are engaging with multiple customers on a milestone basis. Advanced packaging also has important demands from key customers.
David Zinsner: For gross margins, '25 numbers run into '26 with Lunar Lake as a dilutive product in the first half, and Panther Lake is expensive initially on a new process. We should see gross margins improve on the foundry side with scale and leading-edge mix.
Joseph Moore (Morgan Stanley): How are the foundry customer conversations going given you're looking for commitments before investment?
Lip-Bu Tan: We are engaging with multiple customers, showing yield and reliability and building the right IP. It's a service business — we need to demonstrate performance and yield and get test chips so customers can deploy their most important revenue wafers with us. Building that trust is what matters most.
David Zinsner: Customers understand it takes time from capital deployment to output. We're in a reasonably decent position given the CapEx we've already made and assets under construction, so we have line of sight to supply with our existing footprint.
Stacy Rasgon (Bernstein): How are you going to get customers off older products, and are yields where they need to be?
David Zinsner: It's a misnomer to say AI hasn't done well — it was sequentially up double digits. The Windows refresh has been bigger than expected, and Raptor Lake addresses that. On 18A, yields are where we want them at this point and we'll hit our year-end goal, but to be fully accretive on cost we need yields better — that's every process, and it'll take all of next year.
Ben Reitzes (Melius): Update on the NVIDIA relationship?
Lip-Bu Tan: This is a very important collaboration with NVIDIA, connecting Intel x86 leadership with NVIDIA's AI compute via NVLink across multiple generations. It's a multi-year engagement addressing a market that is also incremental — it's not attacking our existing TAM.
INTC (Intel) — Q3 2025 (October 23, 2025). 4th straight beat (rev $13.7B, GM 40%, EPS $0.23); balance sheet transformed; stock ~flat (+0.3%) next day.