By Tae Kim

Intel shares rose after the chip maker gave better-than-expected earnings forecast for the December quarter, but CEO Pat Gelsinger told Barron's the chip maker won't hit the company's prior forecast for AI-related chip revenue.

For the third quarter, Intel reported an adjusted earnings per share loss of 46 cents, compared with Wall Street's consensus estimate for a 2 cents loss, according to FactSet. The results may not be comparable to analysts' estimates as it includes a 63 cents negative impact from impairment charges. Revenue came in at $13.3 billion, which was above analysts' expectations of $13.02 billion.

Guidance was solid. Intel provided a revenue forecast range of $13.3 billion to $14.3 billion for the current quarter, versus the consensus call of $13.66 billion. The company projects adjusted EPS of 12 cents for the December quarter, compared to the 8 cents estimate.

"The momentum we are building across our product portfolio to maximize the value of our x86 franchise, combined with the strong interest Intel 18A is attracting from foundry customers, reflects the impact of our actions and the opportunities ahead," CEO Pat Gelsinger said in the release.

Intel shares rose as much as 12% following the report.

Progress in the AI chip business has been a question from investors. In April, Intel said it expected to generate over $500 million in AI-accelerator revenue in second half of 2024.

In a phone interview with Barron's, Gelsinger said the company is seeing a lot of customer interest for its Gaudi AI-accelerators, but they are "not going to achieve" the prior $500 million forecast in revenue for the products this year.

In August, Intel announced a flurry of bad news -- including cutting 15,000 jobs, issuing disappointing earnings results, and providing weak guidance. The news sent the stock tumbling at the time.

Intel shares have declined about 57% this year, compared with a 14% gain for the iShares Semiconductor ETF.

Write to Tae Kim at tae.kim@barrons.com

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October 31, 2024 16:18 ET (20:18 GMT)

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