Intel shares plummeted over 20% following a weak fourth-quarter forecast, attributed primarily to a continuing slowdown in the global PC market that analysts expect to persist through the first half of next year. Despite outperforming Q3 expectations, the chipmaker’s client computing revenue declined, while an explosion at an Israeli fab further impacted its outlook by an estimated $600 million. Amid strong growth in data center AI and strategic investments in its foundry business, Intel faces a challenging period marked by broader AI market concerns and fierce competition.
Intel shares experienced a significant downturn, plummeting over 20% in extended trading on Thursday after the chipmaker issued a disappointing fourth-quarter forecast. The company attributed the weak outlook to persistent softness in the global personal computer (PC) market, a trend its finance chief expects to continue well into next year.
Key Performance Highlights: Q3 Earnings vs. Weak Q4 Outlook
For the third quarter, Intel outperformed analyst expectations on both earnings and revenue:
- Adjusted Earnings Per Share: 52 cents (vs. 40 cents expected by LSEG)
- Revenue: $16.51 billion (vs. $16.5 billion expected by LSEG)
This revenue figure marked a robust 21% increase from $13.7 billion a year prior. However, the good news was overshadowed by sector-specific challenges. Revenue from Intel's client computing and physical AI group saw a 5% year-over-year decline, falling to $8.1 billion and missing estimates. In contrast, the data center and AI segment demonstrated strong growth, surging 78% to $7.3 billion.
The broader PC market has faced headwinds, with global PC shipments declining 4% in the second quarter compared to the previous year, largely due to escalating costs for memory and other vital components, as reported by Counterpoint Research.
Looking ahead, Intel's guidance for the current quarter painted a stark picture:
- Adjusted Earnings Per Share: 25 cents (significantly below analysts' expectation of 43 cents)
- Revenue: Between $15 billion and $16 billion (missing analysts' projection of $17.1 billion)
"We see the PC slowdown continuing at least through the first half of next year," stated David Zinsner, Intel's finance chief, in the earnings release. He added, "We will continue making disciplined investments in capacity and working capital to increase supply and support future growth."
Intel CEO Lip-Bu Tan speaks during a keynote presentation at Computex in Taipei on June 2, 2026.
Cheng Yu-chen | AFP | Getty Images
Operational Challenges and Market Dynamics
Intel's forecast also accounts for the fallout from a tragic explosion at one of its fabs in Israel earlier this month. The incident, which CEO Lip-Bu Tan called an "unfortunate and tragic accident," claimed two lives and seriously injured another, resulting in an "extended shutdown" at the plant. This will cost the company approximately $600 million in lost revenue over two quarters and impact shipments of 10-nanometer chips.
Prior to this earnings report, Intel's stock had been on a remarkable run, soaring approximately 150% year-to-date. However, October saw a significant sell-off, with shares dropping roughly 23%, fueled by increasing concerns about the scale and sustainability of the artificial intelligence (AI) buildout.
"We will remain disciplined as we invest, and we will not spend $1 of capital unless we have confidence in the health of our products and process technologies, and clear evidence of customer demand," Zinsner affirmed during the earnings call, emphasizing a cautious investment strategy.
The broader chip industry awaits further insights, with Intel's competitors Nvidia, the dominant force in graphics processing units (GPUs), scheduled to report results in mid-November. Advanced Micro Devices (AMD), a key player in both GPUs and central processing units (CPUs), is set to release its report next week.
While chatbots and large AI models heavily rely on GPUs from Nvidia and AMD, Intel's industry-leading CPUs are crucial beneficiaries of the rise in agentic AI. Applications like Meta's Muse and OpenAI's Dots utilize CPUs to orchestrate tasks and data within cloud computing environments. CEO Tan expressed confidence in the long-term, stating, "Despite near term headwinds affecting the broader PC industry, we continue to see robust demand for CPUs and more broadly, for all our computing platforms in the long term."
Foundry Business and Strategic Investments
Intel's foundry business continues to navigate challenges. As the sole U.S.-based manufacturer of advanced logic chips, Intel is now in high-volume production of its most advanced 18A chip from its new Arizona fab, positioning itself as an alternative to Taiwan Semiconductor Manufacturing Co (TSMC). A subsequent fab in Arizona is projected to commence operations by the end of 2028.
Currently, Intel lacks major external customers for its cutting-edge chips. However, Tan optimistically noted, "We're going to have a couple of customers ready to announce the next two quarters," while highlighting "tremendous progress" on its upcoming 14A chips.
Significant investments have flowed into Intel, including a 10% stake taken by the Trump administration last year after the company lagged in its 7- and 10-nanometer technologies. Nvidia and Softbank also poured billions into Intel during the same period.
CEO Tan has adopted a more conservative approach to foundry spending compared to his predecessor, Pat Gelsinger, who spearheaded an ambitious revival of the business. Recently, Intel confirmed the installation of the first structural truss at its massive Ohio fab, which was initially expected to deliver chips in 2025.
Reports in September indicated that SK Hynix, a global leader in high-bandwidth memory, might collaborate with Intel in Ohio to lease foundry space for memory chip production at the new site. While neither company has confirmed these plans, Tan hinted at future developments, stating, "We continue to evaluate unique and highly differentiated opportunities to accelerate our Ohio build out, and I hope to share more on this in the near future."
In August, Intel completed a substantial $23 billion equity offering. This comes as tech giants worldwide have invested trillions to meet the insatiable demand for AI and its foundational infrastructure.
Despite these strategic moves, Tan acknowledged a current shortfall: "disappointed that we were not able to meet strong customer demand in this quarter."
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