Intel Rides on Strength in Client Computing Group: Will it Persist?

Intel Corporation INTC is witnessing solid traction in the Client Computing Group. In the third quarter, the company reported a revenue of $8.53 billion from this segment, up from $8.16 billion in the year-ago quarter. The figure beat our estimate of $8.19 billion.

The 8% uptick was driven by a rebounding PC market after the decline in the post-COVID years. Enterprises across industries are upgrading their PCs to Windows 11 to match the evolving requirements. Growing adoption of AI PCs is another major growth driver. Recently, Arizona State University has opted to deploy an Intel-powered AI PC fleet to optimize operations and improve the performance of the university football team. The company remains firmly on track to ship more than 100 million by 2025.

The CCG segment has extended its collaboration with Microsoft. Intel has integrated the Intel vPro manageability with Microsoft Intune, a cloud-based unified endpoint management solution that allows the IT team to manage, access and protect apps and devices. This allows businesses of all sizes to remotely and securely manage the cloud-connected PC fleets. 

In simple terms, remote management capabilities empower IT teams to repair computer fleets through the familiar Microsoft platform. In a modern decentralized workspace, this integration bridges the gap between physical hardware systems and cloud-connected tools. Moreover, the growing demand for Lunar Lake and Arrow Lake and the introduction of Panther Lake are expected to drive growth in the upcoming quarters.

How Are Competitors Faring?

Intel faces competition from Advanced Micro Devices AMD and Qualcomm Incorporated QCOM. AMD reported $4 billion in revenues in the third quarter, up 73% year over year. The growth was driven by healthy demand for AMD Ryzen processors, higher semi-custom revenue and strong demand for Radeon gaming GPUs.

Qualcomm’s ARM-based AI PCs, Snapdragon X Elite/X2 Elite processors, are also gaining traction. The growing demand for ARM-based chips can challenge Intel’s dominance in the PC market. Quarterly revenues from Qualcomm CDMA Technologies (QCT) were $8.99 billion, up from $8.07 billion a year ago.

INTC’s Price Performance, Valuation and Estimates

Intel has gained 55.6% over the past year compared with the industry’s growth of 30.7%.

Going by the price/book ratio, the company's shares currently trade at 1.38 book value, lower than 31.73 of the industry average.

Earnings estimates for Intel for 2025 have increased, while those for 2026 have declined over the past 60 days.

Zacks Investment Research Intel stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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