Intel shares fell more than 19% in after-hours trading. The reason was a weaker-than-expected outlook for revenue and profitability, the Financial Times reports. The outlook was affected by declining demand for personal computer processors and disruptions in supply chains for data center components.
Details
Intel’s third-quarter revenue was $16.5 billion, in line with analysts’ expectations. For the current quarter, the company forecast revenue of $15 billion to $16 billion. Analysts on average expected $17 billion, while some forecasts topped $18 billion, according to Bloomberg. Earnings excluding one-off items will be $0.25 per share, versus the Wall Street consensus estimate of $0.43.
The main factor weighing on the market is a sharp downturn in the PC market: laptop and desktop manufacturers are facing memory chip shortages and rising component prices, which are reducing equipment shipments and consumer demand, Bloomberg reports.
“One of the main challenges is memory. Prices have risen sharply. In my forecast, this will become a very serious problem for all of us in 2027—the entire market is affected,” Intel CEO Lip-Bu Tan said. The company expects the downturn in the PC market to last at least through the first half of 2027, with a 10% decline next year following a 12% drop in 2026.
Intel warned that its gross margin will fall to 37% this quarter from 43% in the third quarter as costs rise amid memory chip shortages. Tan said the company is “moving with maximum urgency” to expand supply and increase chip sales.
The division that makes server and PC processors generated $15.4 billion in revenue, in line with forecasts. Contract manufacturing revenue was $6.7 billion.
Intel’s capital expenditures totaled $4 billion for the quarter, and the company committed to spending $20 billion in 2026. Quarterly net income reached $3.3 billion. This figure reflects volatility in the value of Intel shares held in escrow as part of its agreement with the U.S. government; adjusted net income was $2.8 billion.
Background
This is Intel’s first quarterly report since the company issued $20 billion in new shares in August. The chipmaker had hoped to capitalize on a rapid rise in its share price following its second-quarter report, when revenue posted its fastest growth in 15 years.
Tan, who took the helm at Intel in 2025, is seeking to strengthen the company’s financial position after years of decline caused by uncontrolled spending on manufacturing capacity, which has yet to attract major outside customers and has left Intel unable to compete with TSMC.
How the stock is doing
Since the start of the year, Intel shares have risen more than 140% as investors bet that the company would be one of the beneficiaries of the AI boom: growing demand for AI services is increasing the need for its general-purpose processors and opening a path into a market dominated by Nvidia technology. However, over the past month, they have lost more than 20% amid investor concerns about rising inflation, the sustainability of the data center boom, and the aggressive borrowing used to finance AI projects.
Intel’s fortunes began to improve after the administration of Donald Trump backed the company’s ambition last year to become the only U.S. company capable of manufacturing advanced chips for artificial intelligence. The U.S. government converted billions of dollars in federal manufacturing subsidies into a 10% stake in Intel. This was followed by multibillion-dollar investments from Nvidia and SoftBank. Elon Musk also said that SpaceX and Tesla would work with Intel on his Terafab factory project in Texas. ㅤ
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