Intel Rides on Strong Gross Margin Expansion: Will it Sustain?

Intel Corporation INTC reported a non-GAAP gross profit of $5.45 billion during the third quarter of 2025, up from $2.39 billion a year ago. Non-GAAP operating margin improves to 40% from 18% a year ago. The figure exceeded management guidance by 4%. The uptick was driven by multiple factors such as higher revenues, a favorable product mix and lower inventory reserves.It is witnessing solid traction in the Client Computing Group. In the third quarter, the company reported revenues of $8.53 billion from this segment, up from $8.16 billion in the year-ago quarter. A rebounding PC market backed by growing adoption of Windows 11 PCs is a major growth driver. Moreover, it has also gained solid market traction in the growing AI PC market. Major PC manufacturers such as HP, Dell, ASUS, Acer and Samsung are collaborating with Intel to develop next-gen AI PCs. This is driving growth in the Client Computing Group and boosting gross margin.Intel has made significant developments in its cost discipline initiatives and streamlined its portfolio to enhance efficiency across its operations. In the third quarter, the company’s cost of sales decreased to $8.43 billion, down from $11.28 billion in the year-ago quarter.How Are Competitors Faring?Intel faces competition from Advanced Micro Devices AMD and NVIDIA Corporation NVDA in the semiconductor space. In the third quarter, AMD reported a non-GAAP gross profit of $4.99 billion, up from $3.65 billion. Non-GAAP gross margin was 54%, up 40 basis points year over year, while it improved from 43.3% reported in Q2. Revenue growth and a healthy product mix are propelling the gross margin.NVIDIA reported a Non-GAAP gross profit of $41.9 billion, up from $26.3 billion a year ago, with respective margins of 73.6% and 75%. The ongoing transition from offering Hopper HGX systems to Blackwell full-scale data center solutions is affecting gross margin. Sequentially, NVIDIA’s non-GAAP gross margin improved 90 basis points as Blackwell ramped with an improved mix and cost structure.INTC’s Price Performance, Valuation and EstimatesIntel has rallied 78.2% over the past year compared with the industry’s growth of 28.5%.Image Source: Zacks Investment ResearchGoing by the price/book ratio, the company's shares currently trade at 1.48 book value, lower than 32.65 of the industry average.Image Source: Zacks Investment ResearchEarnings estimates for 2025 have increased 13.33% to 34 cents, while those for 2026 have declined 9.38% to 58 cents over the past 58 days.Image Source: Zacks Investment ResearchIntel stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2026. Don’t miss your chance to get in on these stocks when they’re released on January 5. Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks