Intel earnings: third quarter 2026

The quarter in brief

Intel's sales rose 21% from a year ago to $16.5 billion in the third quarter of 2026.¹ The growth came from its chips for data centres and artificial intelligence. Its business selling chips for personal computers shrank slightly, and its own chip-making arm still lost money.¹ Sales grew far faster than the money spent on research and administration, which rose only 4%. As a result, operating profit, the profit from running the business before interest and tax, rose to 15.3% of sales from 5.0% a year earlier.¹

Earnings per share, net income divided by the number of shares, pointed two ways. The reported figure fell 33% to $0.60, while Intel's adjusted figure rose 126% to $0.52.¹ Last year's reported profit had been lifted by a $3.67 billion gain on interest and other items, which shrank to $1.13 billion this year. So net income, the profit after everything, fell 18% even as the business itself earned much more.¹ This quarter's reported figure also includes a non-cash gain of about $1.0 billion. It comes from a change in the value of an obligation tied to shares held in escrow under Intel's deal with the U.S. government, which the adjusted figure leaves out.¹ Intel's own forecast points to lower sales and lower profit per share in the fourth quarter.¹

The figures, as the company printed them

Against what analysts expected

The 13 analysts who follow Intel expected earnings per share of $0.28 on average.² Intel's adjusted figure of $0.52 was nearly double that, and its reported figure of $0.60 was higher still.¹ Both readings sit well above the forecast, so this conclusion does not hinge on the one-off gain tied to the escrowed shares.

What the company expects

For the fourth quarter of 2026, Intel expects sales of $15.0 billion to $16.0 billion.¹ Even the top of that range is below this quarter's sales.¹

It expects gross margin of 37.1% on the official accounting basis and 38.0% on its adjusted basis.¹ Gross margin is what is left of each dollar of sales after the direct cost of making the chips. That compares with 43.0% this quarter, so Intel expects to keep noticeably less of each dollar.¹

It expects earnings per share of $0.10 on the official basis and $0.25 on its adjusted basis.¹ The adjusted figure is about half this quarter's adjusted figure.¹ Part of the gap between the two comes from tax. Intel expects a tax rate of 31% on the official basis against 11% on the adjusted one.¹

What would it take to get there, or beyond? Intel says demand for its processors is strong despite near-term weakness in the PC market. It says its priority is to unlock more supply to meet what it calls extraordinary demand for its Xeon server chips.¹ How the range turns out depends on supply and on PCs.

The strong points

For a company that has spent years shrinking and restructuring, a 21% rise in sales matters on its own terms. It matters too because it fed through to profit. Most of the extra sales reached operating profit rather than being swallowed by running costs.¹

The data centre and AI business did most of the work. Its sales jumped 78% to $7.3 billion, and its operating profit more than tripled to $3.04 billion from $964 million.¹ This is where Intel most needs to show it can still compete. Customers building server and AI capacity are buying Intel chips in quantity, and Intel is making a healthy profit on them. Intel also showed new designs aimed at AI work, including its next Xeon server chip, Diamond Rapids.¹

Gross margin rose to 43.0% from 38.2% a year ago.¹ That means more of each dollar of sales was left after the direct cost of making the chips. Intel runs its own costly factories, so this suggests that higher volumes and a richer mix of server chips are making production pay better.

The weak points

Intel's own chip-making arm, Foundry, still lost $1.85 billion in the quarter, although that was less than the $2.32 billion loss a year ago.¹ Its sales rose 58% to $6.7 billion, but most of it was work for Intel's own product units: $6.3 billion of sales between Intel's units cancel out in the company's totals.¹ Intel's long-term plan depends on making chips for outside customers. It reported progress on its next manufacturing process, 14A, but named no new outside customer.¹

Sales of PC chips, still Intel's largest business, fell 5% to $8.1 billion.¹ Intel itself describes the PC market as weak in the near term.¹ Because this business is larger than data centres, its softness limits how far the company's overall growth can go.

Intel lists industry-wide shortages of substrates, the boards chips are mounted on, and of memory among its risks. Its chief executive calls unlocking more supply to meet "extraordinary demand" for its Xeon server chips the immediate priority.¹ Shortages of parts may be part of what holds back its fastest-growing business, though the release does not tie the two together. Stock of unsold goods and parts also rose to $13.1 billion from $11.6 billion at the end of 2025, absorbing $1.45 billion of cash over nine months.¹

The quarter also looks better than the year so far. Over nine months Intel reported a net loss of $11.6 billion. Most of that came from a $12.6 billion non-cash charge on the escrowed shares, with restructuring charges of $4.0 billion on top.¹

What to watch

The first test is supply. The availability and prices of memory and of substrates will move before Intel reports again. So will the waiting times customers face for server chips. If shortages ease and waiting times shorten while sales keep rising, the limit was supply. If waiting times shorten while sales stall, the limit was demand, and Intel's account of extraordinary demand would look weaker.

The second signal is what the big cloud companies say they will spend on data centres. They are the buyers behind the 78% jump in data centre sales. Their spending plans show whether that demand is holding up or cooling.

The third concerns PCs. PC makers' shipments and the stock of unsold machines on their shelves show which way demand is heading. Rising stock with flat shipments would point to further cuts in chip orders. On the factory side, any outside customer signing up for the 14A process would be a sign that Foundry can become more than Intel's in-house supplier. The next results will be a further check on all of these.

Our verdict on the quarter

In all, a strong report. Sales grew strongly, the growth reached profit, and profit per share came in far above what analysts expected on either measure. What holds it back is Intel's own expectations for a weaker fourth quarter, and the soft spots in its PC business and its factories. One thing decides whether this quarter is the start of something lasting. Intel needs enough supply of parts, and steady enough PC demand, for the data centre business to keep growing at this pace.

Notes

1. Intel's results release, 29 October 2026: sec.gov. ↩
2. Nasdaq's earnings calendar, 29 October 2026. ↩