Intel Shares Surge After Strong Q3 Results and Cost Reduction Progress

Intel Corporation (NASDAQ: INTC) shares have shown a positive trend on Friday following the company's announcement of better-than-expected earnings for the 2024 third quarter and notable advancements in its cost reduction strategy.

What Happened: In its recent earnings report, Intel revealed a loss of 46 cents per share. While this was below analysts' expectations of a 2-cent loss, the company's revenue reached $13.28 billion. This figure was down 6% from the previous year but still exceeded analyst predictions of $13.02 billion.

Intel provided a comprehensive breakdown of its revenue by segment for the third quarter. The Client Computing Group contributed $7.3 billion, Data Center and Artificial Intelligence (AI) generated $3.3 billion, Network and Edge added $1.5 billion, Intel Foundry brought in $4.4 billion, and other revenue sources accounted for $1.03 billion. However, intersegment eliminations led to a loss of $4.3 billion.

The company also issued projections for the fourth quarter of 2024, anticipating earnings per share (EPS) of 12 cents, compared to analyst estimates of 8 cents. Additionally, Intel expects sales to land between $13.3 billion and $14.3 billion, higher than the analysts' forecast of $13.66 billion.

CEO Pat Gelsinger commented, “Our Q3 results underscore the solid progress we are making against the plan we outlined last quarter to reduce costs, simplify our portfolio, and improve organizational efficiency. We delivered revenue above the midpoint of our guidance and are acting with urgency to position the business for sustainable value creation moving forward.”

The cost reduction initiative includes structural and operational adjustments along with cuts in workforce, operating expenses, and capital expenditures. As a result, Intel recognized $2.8 billion in restructuring charges.

CFO David Zinsner highlighted that these restructuring charges had a significant impact on Q3 profitability, adding that “the actions we took this quarter position us for improved profitability and enhanced liquidity.”

Analyst Ratings: Following the earnings announcement, several analysts updated their price targets for Intel shares.

• Needham analyst Quinn Bolton reiterated a Hold rating on Intel.
• Rosenblatt analyst Hans Mosesmann maintained a Sell rating, increasing the price target from $17 to $20.
• Benchmark analyst Cody Acree reaffirmed a Hold rating.
• Baird analyst Tristan Gerra sustained a Neutral rating, raising the price target from $20 to $25.

Current Stock Movement: At the time of this report, Intel shares were trading 8.32% higher at $23.31, according to available market data.

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Intel, Earnings, Stock