Introduction
Intel’s third-quarter financial results for 2024 have left the market with mixed reactions. On November 1st, Intel Q3 2024 revenue revealed that despite reporting $13.3 billion in revenue, it faced a staggering $16.6 billion loss—largely due to substantial impairment and restructuring charges, along with severe losses from its manufacturing division.
Interestingly, Intel’s stock initially surged by 12% following the announcement, before settling to a 7% increase at press time. While revenue exceeded analysts’ expectations, the loss and other financial metrics raised concerns about the company’s future trajectory.
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Overview: Intel Q3 2024 Revenue Results in 5 Key Points
- Revenue: $13.3 billion, a 6% decline year-over-year but an increase of $0.5 billion from the previous quarter.
- Net Loss: $16.6 billion, driven by impairment, restructuring charges, and losses in the manufacturing unit.
- Gross Margin: Dropped to a historical low of 15%, reflecting the impact of these extraordinary charges.
- Client Computing Group (CCG): Despite a slight decline, it remained Intel’s highest revenue-generating division with $7.3 billion.
- Data Center and AI Group (DCAI): Reported a slight recovery with $3.3 billion in revenue, but the unit’s profits remained tepid.
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Intel’s Third-Quarter Revenue
Intel Q3 2024 total revenue reached $13.3 billion, which is a 6% decline compared to the same period in the previous year. However, the company saw a quarter-over-quarter increase of $0.5 billion.
Despite the revenue shortfall, the company’s quarterly performance exceeded analysts’ expectations. Intel also noted that it is making significant strides in cost reductions and organizational streamlining, which could help reposition the business in the long term.
Pat Gelsinger, Intel’s CEO, expressed confidence in the company’s ongoing restructuring plan, which aims to enhance efficiency, simplify the portfolio, and reduce operational costs.
He also emphasized the company’s commitment to its x86 architecture and the positive reception of its upcoming Intel 18A technology from foundry customers. Despite the loss, Gelsinger remains optimistic about Intel’s strategic direction, signaling that these moves will lay the foundation for long-term growth and profitability.
The Massive Loss: $16.6 Billion in the Red
One of the biggest headlines from Intel’s Q3 report was its colossal net loss of $16.6 billion. This staggering figure was mainly driven by impairment charges tied to the company’s restructuring efforts.
These charges are a part of Intel’s ongoing strategy to optimize its business and exit less profitable ventures. Furthermore, Intel’s manufacturing division incurred significant losses during the quarter, further exacerbating the company’s bottom line.
In previous years, Intel has posted solid profits despite facing challenges in the competitive semiconductor industry. The current loss, however, represents a major shift in the company’s financial outlook. Gross margin plummeted to a historic low of 15%, a result of higher expenses related to restructuring, product development, and competitive pressures.
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Client Computing Group: A Modest Decline
The Client Computing Group (CCG) remains Intel’s highest-performing segment, generating $7.3 billion in revenue during Q3 2024. While this marks a decrease from the $7.9 billion reported in the same period last year, it is still Intel’s most significant revenue contributor. The CCG’s operating margin stood at 37.1%, reflecting a steady performance amidst a competitive PC market.
Intel’s CCG revenue showed a slight sequential decline, falling $100 million from the previous quarter.
Despite the decrease, the group continued to deliver strong operating profit of $2.7 billion. Intel also began shipments of its Arrow Lake-S processors, aimed at enthusiasts, and the Lunar Lake CPUs, which are designed for compact laptops.
However, the impact of these new product releases has yet to be seen, as they did not significantly boost CCG sales during the quarter.
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Data Center and AI Group: Positive Momentum but Modest Growth
Intel’s Data Center and AI Group (DCAI) showed signs of recovery, generating $3.3 billion in revenue—an increase from both the previous quarter and the same period in 2023.
This marks a positive turnaround for Intel, especially in light of the company’s recent challenges. The DCAI unit’s operating margin improved to 10.4%, indicating a healthier trajectory despite the overall losses.
Intel’s Xeon 6 data center processors, a high-margin product, began shipping during the quarter. However, the volume of Xeon 6 chips sold was likely too low to have a significant impact on the unit’s performance.
While Intel’s Datacenter business has made strides, the overall operating profit remained modest at $0.3 billion. Intel’s executives have signaled that this segment is still in the early ramp-up phase, and growth in this area may take some time to fully materialize.
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Altera, Mobileye, and NEX Division: Mixed Results Across the Board
Intel’s diversified business units also posted mixed results. The NEX division, which focuses on 5G, edge computing, networking, and telecommunications, generated $1.5 billion in revenue. This was in line with the previous quarter and a modest improvement over last year. The division also saw a boost in its operating profit, which reached $300 million.
This performance, while positive, underscores the challenges Intel faces in growing its non-core segments.
Mobileye, Intel’s autonomous driving subsidiary, continued to see steady growth, with Q3 2024 revenue reaching $485 million—up from $440 million in Q2. However, this was still below the $530 million revenue reported during the same period last year. Mobileye posted operating income of $78 million, down from $170 million in Q3 2023, although it remained flat compared to the previous quarter.
On the other hand, Altera, Intel’s programmable solutions division, faced more difficulties. The unit’s revenue for Q3 2024 reached $412 million, up from $361 million in the prior quarter, but it still lagged behind the $735 million generated during Q3 2023. Altera’s operating profit dropped significantly to just $9 million, a steep decline from the $263 million profit posted a year ago.
Intel’s Outlook for Q4 2024: Modest Expectations
Looking ahead to Q4 2024, Intel has forecast revenue in the range of $13.3 billion to $14.3 billion. This represents a decline from the $15.4 billion recorded during the same period last year. Despite introducing updated products, including its new Xeon 6 processors and upcoming Intel 18A chips, Intel’s outlook reflects a challenging competitive environment.
The company also projects its GAAP gross margin to increase to 36.5% for the fourth quarter, up from the 15% reported in Q3, but still reflecting the impact of Intel’s ongoing restructuring and cost-cutting initiatives.
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Conclusion:
Intel Q3 2024 financial revenue results paint a picture of a company in transition. While revenue exceeded expectations, the significant net loss, driven by restructuring and impairment charges, raises questions about the company’s future performance. Despite these challenges, Intel remains optimistic, emphasizing its progress in cost reduction and portfolio simplification.
The company’s focus on high-margin products like Xeon 6 processors and Intel 18A technology, along with continued investments in its Client Computing Group and Data Center divisions, could set the stage for a recovery in the coming quarters.
However, Intel’s ability to regain market share and address its manufacturing challenges will be crucial in determining whether it can return to profitability in 2025 and beyond.
