Intel beats third-quarter profit estimates as cost cuts, investments pay off

(Reuters) -Intel forecast fourth-quarter revenue just shy of estimates on Thursday, but beat expectations for September-quarter profit as CEO Lip-Bu Tan's drastic cost-cutting measures helped the chipmaker shore up its finances amid a slew of high-profile investments in the company.  This marks the Santa Clara, California-based company's first earnings announcement after multibillion-dollar investments from Nvidia and Japan's SoftBank as well as an unprecedented U.S. government stake, with investors anticipating a major cash boost.  The investments are expected to be a major lifeline for Intel, which has been struggling to maintain its dominance in the PC and server central processing unit markets as it competes with Advanced Micro Devices, while repeated attempts to break into the AI chip market commanded by Nvidia have not produced results.  After its share price dropped about 60% last year due to these concerns, Intel stock has risen nearly 90% so far in 2025 thanks to the new investments in the company, helping it outperform the stock of artificial-intelligence chip leader and Wall Street darling Nvidia.  Nvidia said last month it would invest $5 billion in Intel, giving it a stake of about 4% after new shares are issued. In August, Intel secured $2 billion from SoftBank. After U.S. President Donald Trump called for CEO Tan's resignation over China ties, a hastily arranged Washington meeting produced an unusual deal involving the U.S. government taking a 10% stake for $8.9 billion.  For the September quarter, it recorded adjusted gross margins of 40%, beating estimates of 35.7%, while adjusted profit of 23 cents per share also outperformed expectations of a profit of 1 cent per share, according to data compiled by LSEG.  The company will end the year with a workforce that is over one-fifth smaller than last year, it had said in July, while Tan has significantly pared back the expensive manufacturing ambitions of his ousted predecessor, Pat Gelsinger. Tan has aggressively cut costs and divested assets, after Gelsinger's ambitions of turning Intel into a contract manufacturer of chips that would compete against Taiwan's TSMC led to the company in 2024 recording its first annual loss since 1986.  Intel forecast current-quarter revenue between $12.8 billion and $13.8 billion, with a midpoint of $13.3 billion, compared with analysts' average estimate of $13.37 billion. (Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney and Stephen Nellis in San Francisco; Editing by Matthew Lewis)

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