Intel Reports Q3 Profit as AI Server Chip Demand Drives Strategic Shift

Intel has shown signs of recovery with its stock price rising due to improved execution, strategic partnerships, and optimism about future growth, as reflected in raised analyst price targets. CEO Lip-Bu Tan's aggressive cost-cutting and strategic investments, including support from Nvidia, SoftBank, and the US government, have helped Intel surpass profit estimates and regain stability after a challenging 2024. The company is prioritizing AI server chips over consumer processors due to chip shortages expected to peak in early 2026, leading to a modest decline in consumer chip shipments but strong growth in data center and AI sectors. Intel plans to release new AI GPUs annually to compete with Nvidia and AMD, although the impact on its gaming GPU lineup remains uncertain. The rollout of next-generation Panther Lake chips will be gradual, with only one SKU launching in 2025 and more in 2026, partly due to high costs and yield challenges with the advanced 18A manufacturing process, which is expected to reach acceptable margins by 2027. Overall, Intel is focusing on balancing supply constraints, shifting demand towards more profitable AI products, and leveraging external commitments for capacity expansion rather than aggressive internal spending.