Intel beats This fall earnings expectations however flags softer margins and income in Q1

Strong Q4 execution was overshadowed by cautious Q1 guidance, tempering the near-term earnings outlook.

Summary

• Q4 EPS and revenue beat expectations, driven by Datacenter & AI and Foundry

• Gross and operating margins surprised meaningfully to the upside in Q4

• Client Computing revenue slightly missed estimates

• Q1 EPS and revenue guidance fell short of consensus

• Margin outlook for Q1 flagged renewed pressure

Intel reported a stronger-than-expected set of results for the December quarter, delivering beats across earnings, revenue and margins, although a cautious outlook for the March quarter tempered the market reaction. Adjusted earnings per share came in at $0.15, well above consensus expectations, while revenue of $13.67bn also topped forecasts, pointing to improved execution across several key segments.

Margins were a standout feature of the quarter. Adjusted gross margin rose to 37.9%, comfortably ahead of estimates, while adjusted operating margin reached 8.8%, also exceeding expectations. The margin performance suggests progress on cost control and operational efficiency following a prolonged period of restructuring and investment, and provided a notable positive surprise for investors focused on Intel’s turnaround narrative.

Segment performance was mixed but broadly supportive. Datacenter & AI revenue rose to $4.74bn, beating estimates and underscoring ongoing demand for compute and AI-related infrastructure, even as competitive pressures remain intense. Intel Foundry revenue also exceeded expectations at $4.51bn, highlighting incremental traction in the company’s manufacturing ambitions. By contrast, Client Computing revenue of $8.19bn came in slightly below forecasts, reflecting persistent softness in the PC market and ongoing caution among enterprise and consumer buyers.

Looking ahead, guidance for the March quarter was weaker than the market had anticipated. Intel forecast adjusted EPS at breakeven, below consensus expectations, and projected revenue in a range of $11.7bn to $12.7bn, implying a softer near-term demand environment. The company also guided to a decline in adjusted gross margin to 34.5%, signalling renewed margin pressure as volumes ease and investment spending continues.

Overall, the results highlight a company making tangible operational progress, but still navigating a challenging demand backdrop. While Q4 execution and margin delivery were encouraging, the softer Q1 outlook reinforces that Intel’s recovery is likely to remain uneven, with investor confidence hinging on sustained Datacenter growth and continued foundry momentum through 2026.