Key takeaways
- Intel shares crashed in after-hours trading despite Q3 revenue rising 21% to $16.5 billion
- Disappointing Q4 guidance, slowing PC demand, and a factory explosion weighed on investor confidence
- Intel's Data Center and AI revenue surged 78% to $7.3 billion
Intel shares plunged as much as 23% in after-hours trading on Oct. 29, after the semiconductor giant issued a disappointing fourth-quarter forecast despite beating Wall Street's third-quarter earnings expectations.
The chipmaker reported quarterly revenue of $16.5 billion, which represents a 21% increase from the previous year. Adjusted earnings reached $0.52 per share, comfortably exceeding analysts' expectations of approximately $0.40.
However, investors focused on the company's weaker financial outlook rather than its latest earnings beat.
Intel's Weak Revenue Forecast Sends Shares Tumbling
Intel projected fourth-quarter revenue between $15 billion and $16 billion, which is way below Wall Street's expectations of approximately $17.07 billion. The company also forecast adjusted earnings of $0.25 per share, compared with analysts' expectations of around $0.44.
(Source: intc.com)
The disappointing guidance reflected the mounting pressure from slowing PC demand, rising memory prices, and manufacturing disruptions.
Intel warned that weakness in the PC market could persist through the first half of 2027, and could potentially limit revenue growth.
Factory Explosion Adds to Intel's Manufacturing Challenges
Intel's outlook was further complicated by an October explosion at its Kiryat Gat manufacturing facility in Israel. The incident disrupted production and was expected to reduce revenue by approximately $600 million across the fourth quarter of 2026 and the first quarter of 2027.
The disruption also threatened Intel's ability to supply server processors to cloud computing customers, which only added pressure to a business already struggling to meet growing demand.
Meanwhile, Intel anticipated approximately $20 billion in manufacturing investments during 2026, with spending expected to increase in 2027. The company also warned that it did not expect to generate positive cash flow this year.
Strong AI Growth Offers Hope for Intel Stock
Despite the disappointing outlook, Intel's artificial intelligence and data center businesses experienced impressive growth. Data Center and AI revenue surged 78% year over year to $7.3 billion, supported by strong demand for processors powering AI infrastructure.
Intel's foundry business also recorded 58% revenue growth, reaching $6.7 billion. These developments offered encouraging signs for Intel's longer-term recovery, although investors are still concerned about profitability and execution.
Investors will now be watching whether Intel can stabilize production, meet growing server-chip demand, and restore confidence in its turnaround strategy heading into 2027.