Intel shares plunge after forecast of $15B to $16B revenue, short of $17B expected

Guidance falls short of Wall Street

Intel reported third-quarter revenue of $16.5 billion on Thursday, 29 October, up 21% from a year earlier and in line with expectations. Net profit fell 18% over the same period to $3.3 billion. The weakness lay in the outlook. For the fourth quarter, Intel expects revenue of $15 billion to $16 billion, while analysts had anticipated about $17 billion. The company also projected adjusted earnings of 25 cents a share against estimates of 43 cents, and a gross margin of 37%, down from 43% in the third quarter.

Forecast low15

Forecast high16

Analyst expectation17

Forecast low

15 US$ billion

Forecast high

16 US$ billion

Analyst expectation

17 US$ billion

Data from the article text

Memory shortage hits PC demand

Chief financial officer David Zinsner said business had weakened over several weeks, a slowdown Intel attributes to memory prices. Data centre builders have outbid other parts of the electronics supply chain for components, and PC makers have raised prices and shipped fewer systems as a result. Third-quarter PC chip sales fell 5% to $8.1 billion, while data center and AI sales rose 78% to $7.3 billion. Intel expects the PC market to shrink 12% in 2026 and a further 10% in 2027.

On the earnings call, Zinsner was blunt about the memory outlook.

“Make no mistake, we are not optimistic about next year in terms of memory.”

Data center and AI7.3

PC chips8.1

Data center and AI

7.3 US$ billion

PC chips

8.1 US$ billion

Data from the article text

Supply problems and the turnaround

Chief executive Lip-Bu Tan said the company had not been able to serve demand fully, pointing to shortages of some raw materials and a temporary factory shutdown in Israel that held back the data centre unit. Tan said Intel was "moving with urgency" to unlock supply. Intel's product business brought in $15.4 billion of revenue in the quarter, in line with expectations, while its foundry, the contract manufacturing arm, reported $6.7 billion. Intel said demand for its budget Wildcat Lake laptop chips is outstripping supply, and Zinsner said those chips are now sold out. Thursday's results were Intel's first earnings report since it issued $20 billion of new stock in August, and the company plans to invest about $20 billion this year.

Outlook into 2027

Zinsner said the PC slowdown would continue at least into the first half of 2027. He said Intel expects memory conditions not to improve in 2027, while the company would have to see in 2028 whether they get better. Tan told Bloomberg that memory prices had risen sharply and that the issue would weigh on the whole industry.

“Memory pricing went up a lot. I think my prediction is that in 2027 it is going to be a very severe issue to all of us.”

Zinsner also said he expects the PC market to be reshaped rather than to disappear, stating that the PC is going to go through a renaissance despite the current problems.

Shares and market reaction

Intel shares dropped sharply in after-hours trading on Thursday. Estimates of the fall range from 16% to 22%, and the stock recovered slightly afterwards. The stock had risen more than 140% since the start of the year but had lost more than 20% over the past month, amid concerns about inflation, the sustainability of the data centre boom and heavy borrowing to fund AI investment. Since September, shares had slid more than 30%. The US government holds a 10% stake in the company, converted from federal manufacturing grants, and Nvidia and SoftBank have also invested billions.