Intel Shares Drop Over 20% Following Weak PC Market Outlook
Intel's shares fell more than 20% after a poor fourth-quarter forecast driven by a decline in PC sales and supply chain issues.
Intel’s stock plummeted over 20% in after-hours trading following the company’s weak fourth-quarter outlook, attributed to ongoing challenges in the global PC market.
For the third quarter, Intel reported a revenue increase of 21% to $16.5 billion, but its client computing and physical AI segment saw a 5% decline year-over-year, generating $8.1 billion. In contrast, data center and AI revenue surged by 78%, totaling $7.3 billion. Despite overall growth, Intel’s forecast for the upcoming quarter fell short of analysts’ expectations.
Intel anticipates adjusted earnings per share of 25 cents, with revenue projected between $15 billion and $16 billion. Analysts had estimated revenue of $17.1 billion and earnings of 43 cents. CFO David Zinsner acknowledged that the PC slowdown is set to persist through at least the first half of 2027.
“We see the PC slowdown continuing at least through the first half of next year,” Zinsner stated.
Contributing to the downturn, a recent explosion at an Intel fabrication facility in Israel caused significant operational disruptions and is expected to cost the company around $600 million in lost revenue across two quarters. Zinsner described the incident as an “unfortunate and tragic accident” that caused an extended shutdown at the plant.
While Intel has seen a strong year-to-date performance, going up approximately 150% prior to this earnings report, concerns surrounding the artificial intelligence sector’s growth have led to a 23% decline in stock value in October alone.
CEO Lip-Bu Tan emphasized the long-term potential of the AI and server CPU market, projecting a five-fold increase in the total addressable market for server CPUs over the next five years, driven mainly by agentic workloads.
“We expect the 2026 PC unit TAM to decline approximately 12%, with second half units down more than 20%,” said CFO Zinsner.
Intel’s foundry business remains under pressure, with the company focusing on improving its advanced fabrication processes, having made strides in wafer yields which enhance profit margins. However, competition from companies like Nvidia and AMD complicates matters as they dominate the GPU segment critical for AI advancements.
Looking ahead, Tan noted that Intel is taking a disciplined approach to capital expenditures, ensuring investments are based on strong evidence of product demand and customer needs. Despite a challenging environment, he expressed confidence in the long-term demand for Intel’s CPUs.
Sources
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.