Intel reported third-quarter 2025 revenue of $13.7 billion, up 3 percent year-over-year, reflecting solid execution and growing demand across its AI and client computing businesses. The company expects Q4 2025 revenue between $12.8 billion and $13.8 billion.
Intel CEO Lip-Bu Tan said, “AI is accelerating demand for compute and creating attractive opportunities across our portfolio, including x86 platforms, purpose-built ASICs, accelerators, and foundry services. Intel’s CPUs and U.S.-based advanced manufacturing position us well to capitalize on AI-driven growth.”
AI-driven Business Momentum
Intel’s Data Center and AI (DCAI) segment posted $4.1 billion in revenue, down 1 percent year-over-year but up 5 percent sequentially, surpassing expectations due to improved product mix and higher enterprise demand. Growth was powered by AI server and storage compute, reflecting the rising importance of CPUs in AI data centers.
The launch of Xeon 6 processors (Granite Rapids), offering up to 68 percent total cost of ownership (TCO) savings and 80 percent lower power consumption, is helping Intel strengthen its foothold in AI workloads, particularly in AI inference, where CPUs are increasingly critical. Intel noted growing customer interest in long-term supply agreements to support AI infrastructure expansion.
Client Computing Strength Supports AI Ecosystem
The Client Computing Group (CCG) delivered $8.5 billion, up 5 percent year-over-year and 8 percent sequentially, driven by robust PC demand, Windows 11 refresh cycles, and strong adoption of AI PC processors like Lunar Lake and Arrow Lake. Intel also deepened its collaboration with Microsoft, integrating Windows ML and Intel vPro manageability with Microsoft Intune, enabling more secure, cloud-connected fleet management for enterprise customers.
Intel projects PC TAM (total addressable market) to reach 290 million units in 2025, signaling a continued rebound in PC demand supported by AI-capable systems.
Foundry and Manufacturing Progress
Intel’s Foundry business recorded $4.2 billion, down slightly from last year, but achieved key milestones in Intel 18A and Intel 14A process development. Foundry operations are becoming an essential part of Intel’s AI strategy as the company expands its advanced packaging capabilities to meet the needs of AI hardware customers such as NVIDIA and SoftBank, both of which made strategic investments this quarter.
Financial Strength and Outlook
Intel CFO David Zinsner highlighted improved financial execution and rising AI-driven demand: “Our stronger-than-expected Q3 results mark our fourth consecutive quarter of improved execution. Current demand is outpacing supply, a trend we expect will persist into 2026.”
Intel has projected a revenue range of $12.8 billion to $13.8 billion for the fourth quarter of 2025, signaling a flat performance quarter-over-quarter when adjusted for the Altera deconsolidation. The company acknowledged that it continues to face supply constraints, which are likely to limit its ability to fully meet customer demand.
Despite strong AI momentum and a resilient data center business, Intel expects a mixed performance across business units in the final quarter of the year.
Tight Supply Limits Growth Potential
Intel said overall Intel Products revenue will be up modestly sequentially, but below customer demand due to continued tightness in wafer and component supply. The company is prioritizing server shipments over entry-level PC components, reflecting higher-margin opportunities in AI and enterprise markets.
Segment Outlook
Client Computing Group (CCG): Expected to decline modestly in Q4 after strong seasonal demand in Q3. Intel continues to manage its supply mix carefully amid limited capacity for entry-level client parts.
Data Center and AI (DCAI): Forecast to grow strongly sequentially, benefiting from the ramp of Xeon 6 (Granite Rapids) and ongoing demand for AI-optimized CPUs in enterprise and cloud markets.
Intel Foundry: Expected to show sequential revenue growth, driven by increased Intel 18A production and external foundry business gains following the Altera deconsolidation.
All Other (excluding Altera): Anticipated to decline, in line with Mobileye’s weaker guidance, though partially offset by sequential gains in IMS (Intel’s manufacturing support business).
Heavy Capital Spending Continues
Intel reaffirmed its 2025 gross capital investment outlook at approximately $18 billion, with total capex deployment of more than $27 billion, up from $17 billion in 2024. The increased spending underscores Intel’s push to advance its manufacturing leadership and meet long-term AI infrastructure demand, even as near-term constraints weigh on results.
Summary
Intel’s fourth-quarter outlook highlights a transitional period marked by supply tightness, shifting product priorities, and strategic restructuring following Altera’s spin-out. While demand for AI and data center products remains robust, the company’s short-term revenue growth is expected to remain muted, setting up a challenging end to 2025.
Intel’s third-quarter performance reflects its renewed focus on AI and compute-intensive markets. Growth in AI-enabled PCs, higher demand for Xeon processors in AI data centers, and manufacturing advancements are laying the groundwork for sustained momentum into 2026.
Rajani Baburajan
