Intel’s shares jumped nearly 8% in after-hours trading after the chipmaker reported better-than-expected revenue, signalling early success in its ongoing turnaround.

The company posted third-quarter revenue of US$13.7 billion (A$20.6 billion), a 3% increase on last year and above Wall Street expectations of US$13.2 billion (A$19.9 billion).

Net income hit US$4.1 billion (A$6.2 billion), reversing a staggering US$16.6 billion (A$25.1 billion) loss a year ago, marking Intel’s first profitable quarter since 2023.

Chief Executive Lip-Bu Tan credited the results to “improved execution” and strong performance in core markets.

“We are taking the right steps to create sustainable shareholder value,” he said, noting that PC chip sales exceeded expectations due to upgrades to Microsoft’s operating system and increased demand for AI-enabled servers.

Investor confidence has been boosted by a trio of multibillion-dollar investments this year.

The US government converted grants into a 10% stake, SoftBank invested US$2 billion (A$3.0 billion), and Nvidia committed US$5 billion (A$7.5 billion) and agreed to integrate Intel CPUs with its AI GPUs.

Tan, who took over as CEO in March, has faced pressure from the White House to keep Intel’s US chipmaking ambitions on track, including a multibillion-dollar foundry expansion.

Despite the earnings boost, Intel’s contract manufacturing unit remains under pressure, posting a 2% drop in revenue to US$4.2 billion (A$6.3 billion) and continuing losses as it seeks major clients.

The company has also cut nearly 30% of its workforce in the past year, streamlining management and focusing on hiring top engineering talent.

Gross margins improved to 38%, up from 15% a year ago, reflecting efficiency gains, though profitability is still weighed down by the high cost of developing new chip technologies.

Looking ahead, Intel expects fourth-quarter revenue of between US$12.8 billion and US$13.8 billion (A$19.3 billion to A$21.3 billion).

Tan said engagement with potential clients has increased and expressed growing confidence in the company’s future, even as competition with rivals like AMD and TSMC continues.