Intel shares drop over 20% as weak Q4 outlook overshadows Q3 beat
Intel fell more than 20% in after-hours trading after forecasting fourth-quarter results well below analyst expectations, even though third-quarter revenue and earnings topped estimates.
Third-quarter revenue reached $16.5 billion, up 21% from a year earlier, with adjusted earnings of 52 cents per share matching or beating analyst estimates. Growth was driven by data-centre and AI-related demand, with that segment’s revenue jumping 78% to $7.3 billion and foundry revenue rising 58% to $6.7 billion.
The client computing division, which covers PC processors, told a different story: revenue there fell 5% to $8.1 billion. Intel pointed to rising memory-chip prices as a growing drag on PC demand, pushing up computer costs for consumers, and said it expects the PC market to shrink further in 2027, with weakness potentially stretching into the first half of the year and memory-price pressure lingering into 2028.
For the fourth quarter, Intel guided revenue of $15 billion to $16 billion, short of analyst expectations of roughly $17 billion, and adjusted earnings of 25 cents per share versus market estimates near 43 cents. Supply issues are also limiting Intel’s ability to meet demand for data-centre chips, with raw-material shortages and disruptions at its Israeli manufacturing site adding pressure. An explosion at that facility is expected to cost the company around $600 million in revenue over two quarters.
The scale of the capital spending needed to expand manufacturing capacity has raised additional questions about Intel’s cash generation even as AI-related demand stays strong.
Why it matters for markets: A sharp Intel selloff weighs on sentiment toward the Nasdaq 100 and semiconductor-related stocks, while signals of a longer PC-market downturn and persistent memory-chip cost pressure could feed into broader tech-sector earnings expectations.
Source: Economic Times Markets