Intel Q3 EPS Up 126% YoY, but Q4 Guidance Misses Estimates; Shares Plunge over 21% After Hours

TradingKey - Intel (INTC) reported its third-quarter FY2026 financial results, with rapid growth in the data center business driving improvements in revenue and operating profit, and adjusted earnings per share exceeding market expectations. However, PC business revenue continued to decline, and the midpoint of fourth-quarter revenue guidance fell below both the current quarter and market expectations.

Intel reported revenue of $16.513 billion for the quarter, up 21% year-over-year, slightly above market expectations of $16.5 billion. Non-GAAP diluted earnings per share were $0.52, up 126% year-over-year, which was $0.12 higher than the comparable consensus expectation of $0.40, beating expectations by 30%. GAAP diluted earnings per share came in at $0.60, down 33% year-over-year.

Intel's stock plunged over 21% in after-hours trading. As of press time, the decline narrowed to 15.33%, trading at $77.96, hitting its lowest level since mid-April this year.

Intel stock price chart, Source: TradingView

By business segment, the Data Center and AI (DCAI) segment was the main growth driver, with revenue of $7.318 billion, up 78% year-over-year, and operating profit increasing from $964 million in the same period last year to $3.039 billion. Chief Financial Officer David Zinsner said the company recorded its strongest data center revenue growth in 15 years. Chief Executive Officer Lip-Bu Tan stated that CPU demand remains strong, and the top priority currently is to release more supply to meet robust demand for Xeon processors.

The Client Computing and Physical AI (CCPG, formerly CCG) segment was relatively weak, with revenue of $8.097 billion, down 5% year-over-year, and operating profit falling from $2.694 billion to $2.285 billion. Combined revenue for Intel Products across the two segments reached $15.415 billion, up 22% year-over-year, with an operating profit of $5.324 billion.

In terms of profit margins, GAAP gross margin rose to 43.0%, up 4.8 percentage points year-over-year; non-GAAP gross margin was 44.1%, up 4.1 percentage points year-over-year. GAAP operating profit reached $2.522 billion, up from $683 million in the prior-year period, with operating margin rising from 5.0% to 15.3%; non-GAAP operating profit was $3.234 billion, with operating margin increasing from 11.2% to 19.6%.

It is worth noting that net income showed different directions under the two accounting measures: GAAP net income attributable to Intel was $3.320 billion, down 18% year-over-year, while non-GAAP net income was $2.756 billion, up 169% year-over-year.

Regarding cash flow, operating cash flow for the quarter was $5.082 billion, compared to $2.546 billion in the same period last year; total capital expenditures were $4.219 billion, compared to $2.956 billion in the same period last year. The company reported adjusted free cash flow of $1.639 billion, compared to $896 million in the prior-year period.

Looking ahead to Q4 FY2026, the company expects revenue between $15.0 billion and $16.0 billion, with a midpoint of $15.5 billion, lower than this quarter's $16.513 billion and below market expectations of $17.1 billion. Based on the midpoint of the revenue range, non-GAAP gross margin guidance is 38%, and earnings per share is projected at $0.25, below the corresponding level of this quarter and below market expectations of $0.43.