Intel shares plunged more than 25% during Friday’s US trading session after the semiconductor giant issued disappointing fourth-quarter earnings and revenue forecasts, overshadowing its stronger-than-expected third-quarter performance.
The sharp selloff reflected growing investor concerns about weakening personal computer demand, declining profit margins and the challenges facing Intel’s broader turnaround strategy.
Despite strong growth in its data center and artificial intelligence businesses, the company’s cautious outlook raised fresh questions about its near-term financial performance.
Intel Stock Plunges as Q4 Forecast Misses Wall Street Estimates
Intel (NASDAQ: INTC) reported adjusted earnings of $0.52 per share for the third quarter, comfortably exceeding analysts’ expectations of $0.40.
Quarterly revenue increased 21% year over year to $16.5 billion, slightly surpassing Wall Street’s consensus forecast of $16.48 billion.
However, the company’s fourth-quarter guidance disappointed investors.
Intel expects revenue between $15 billion and $16 billion, significantly below analysts’ projections of $17.08 billion.
The midpoint of the company’s forecast represents a shortfall of approximately 9% compared with market expectations.
Meanwhile, Intel projected adjusted earnings of just $0.25 per share for the fourth quarter, well below the $0.44 anticipated by analysts.
The weaker outlook triggered heavy selling pressure, with Intel shares losing more than a quarter of their value during Friday morning’s trading session.
Weak PC Demand Weighs on Intel’s Growth Outlook
Intel continues to face contrasting business conditions, with strong demand for server processors offsetting weakness in the personal computer market.
CEO Lip-Bu Tan acknowledged the challenges affecting the PC industry but emphasized that demand for Intel’s central processing units remains resilient.
Tan also highlighted improvements in operational execution, manufacturing capacity and semiconductor production technology.
However, Chief Financial Officer David Zinsner warned that weakness in the PC market could persist through at least the first half of 2027.
The slowdown has already affected Intel’s consumer-focused operations.
Revenue from the company’s Client Computing and Physical AI Group declined 5% year over year to $8.1 billion during the third quarter.
The contraction reflects weaker industry demand and continued challenges within the broader PC market.
Intel Data Center and AI Revenue Surges 78%
Despite its disappointing outlook, Intel delivered impressive growth in its data center and artificial intelligence operations.
Revenue from the Data Center and AI segment surged 78% year over year to $7.3 billion.
According to CFO David Zinsner, the increase represented Intel’s strongest data center revenue growth in approximately 15 years.
The performance highlights rising demand for server processors and computing infrastructure supporting enterprise workloads and artificial intelligence applications.
However, the strength of this division has not been sufficient to eliminate investor concerns about the company’s broader financial outlook.
Intel must continue balancing growth opportunities in data centers with competitive pressures and weaker demand across its traditional PC business.
Intel Profit Margins Face Renewed Pressure
Intel also reported an improvement in profitability during the third quarter.
Its adjusted gross margin increased to 44.1%, compared with 40% during the same period last year.
However, management expects the figure to decline to approximately 38% in the fourth quarter.
The anticipated reduction suggests that profitability could come under renewed pressure despite improvements in certain business segments.
Analysts at Baird expressed concerns about Intel’s competitive position and the timing of a meaningful recovery in its client computing business.
The investment firm expects easier year-over-year comparisons in the client segment to emerge only during the second half of 2027.
Baird also anticipates further market share losses across both major business segments during 2027.
These projections underscore the challenges Intel faces as it attempts to strengthen its competitive position in the global semiconductor industry.
Intel Foundry Revenue Jumps 58% as Manufacturing Expansion Continues
Intel’s semiconductor manufacturing business also recorded substantial revenue growth.
Intel Foundry generated $6.7 billion in third-quarter revenue, representing a 58% increase compared with the previous year.
The improvement reflects progress in the company’s manufacturing operations as it continues developing advanced semiconductor production capabilities.
Meanwhile, Intel generated $5.1 billion in operating cash flow during the quarter.
However, investors remain focused on whether its foundry business can attract enough external customers to justify the substantial investments required for expansion.
Securing additional manufacturing contracts will be an important factor in determining the long-term success of Intel’s turnaround efforts.
The company must also demonstrate that its advanced manufacturing processes can compete effectively with established semiconductor foundries.
Intel Turnaround Strategy Faces Critical Challenges
Intel’s latest earnings highlight the difficulties facing the chipmaker as it works to restore growth and improve profitability.
Although third-quarter revenue and earnings exceeded expectations, weaker guidance suggests that its recovery may take longer than investors anticipated.
Strong demand for data center processors and improving foundry revenue provide encouraging signs.
However, declining PC demand, expected margin compression and competitive pressures remain significant obstacles.
Investors will closely monitor updates on manufacturing capacity, external foundry customer commitments and Intel’s next-generation semiconductor technology roadmap.
Management’s earnings call could provide further details about the company’s progress and its ability to execute its long-term strategy.
For now, the sharp decline in Intel stock demonstrates that Wall Street remains more concerned about the company’s future earnings potential than its better-than-expected third-quarter results.
