Net revenue of $16,513 million missed the $16,537.37 million estimate; non-GAAP EPS of $0.52 beat the $0.4059 estimate. Revenue was up 21% year over year and GAAP EPS was $0.60.
Q4 guidance steps down on every line: revenue $15.0 billion to $16.0 billion, non-GAAP gross margin 38.0% (GAAP 37.1%), non-GAAP EPS $0.25 (GAAP $0.10), against Q3 non-GAAP gross margin of 44.1% and non-GAAP EPS of $0.52.
Data center carried the quarter: DCAI revenue $7.3 billion, up 78%, with operating income of $3,039 million versus $964 million a year ago; non-GAAP operating margin rose to 19.6% from 11.2%.
Client is shrinking: CCPG revenue $8.1 billion, down 5%, and the CFO expects the PC slowdown to continue at least through the first half of next year.
The one thing that matters: the margin step-up is real and comes from data center, but the Q4 guide gives much of it back, with non-GAAP gross margin falling to 38.0% from 44.1%. The release does not explain the drop beyond the PC slowdown, so the durability of the Q3 margin is the open question.
Key metrics
Metric
Reported
Prior year
Change
Non-GAAP gross margin
44.1%
40.0%
up 4.1 ppts
Non-GAAP operating margin
19.6%
11.2%
up 8.4 ppts
Data Center and AI (DCAI) revenue ($B)
7.3
—
up 78%
Client Computing and Physical AI Group (CCPG) revenue ($B)
$8.1
—
down 5%
Intel Foundry revenue ($B)
6.7
—
up 58%
Cash from operations
$5.1 billion
—
—
Guidance changes
Item
New guidance
Prior guidance
Q4 2026 revenue
$15.0 billion to $16.0 billion
—
Q4 2026 non-GAAP gross margin
38.0%
—
Q4 2026 GAAP gross margin
37.1%
—
Q4 2026 non-GAAP EPS attributable to Intel-diluted
GAAP EPS overstates the operating quarter. GAAP EPS of $0.60 sits above non-GAAP $0.52 because of a $1,005 million mark-to-market gain on Escrowed Shares ($0.17 per share) and $330 million of equity investment gains; non-GAAP operating income of $3,234 million versus $1,524 million is the cleaner read.
Per-share growth trails profit growth on dilution. Non-GAAP net income rose 169% but non-GAAP EPS rose 126%, as diluted shares climbed to 5,307 million from 4,531 million around the $23 billion equity offering.
Cash backs the earnings, capex absorbs most of it. Operating cash flow of $5,082 million exceeded GAAP net income attributable to Intel of $3,320 million, but adjusted free cash flow was $1,639 million after $4,219 million of gross capital expenditures.
Gotchas & watch items
Cash is flowing out to partners: nine-month partner distributions were $14,442 million versus $159 million a year earlier, against partner contributions of $5,032 million.
Inventory is building: inventories reached $13,068 million versus $11,618 million at December, with work in process at $8,797 million, a $1,450 million nine-month cash outflow.
Foundry losses are narrowing: Intel Foundry posted an operating loss of $1,853 million versus $2,321 million a year ago, on revenue of $6,697 million versus $4,235 million.
The Q4 tax rate jumps: the GAAP tax rate is guided at 31% versus 11.6% in Q3, weighing on Q4 GAAP EPS guidance of $0.10.