Intel Shares Plunge After PC Slump, Supply Snags Hurt Outlook

Sales in the fourth quarter will be $15 billion to $16 billion, the company said Thursday in a statement. Analysts, on average, estimated $17 billion, and some projections topped $18 billion, according to data compiled by Bloomberg. Profit will be 25 cents a share in the quarter, excluding certain items. Wall Street was projecting adjusted earnings of 43 cents a share.

Intel CEO Lip-Bu Tan said he was disappointed in the company's ability to fulfill demand.

Intel is contending with a severe slump in the personal computer market. Makers of laptops and desktops - key customers - are struggling with shortages of memory semiconductors and surging component prices. That's cut into PC shipments and hurt demand from users. In addition, Chief Executive Officer Lip-Bu Tan said his company's data center unit would have done even better if it hadn't suffered from shortages of some raw materials and a shutdown of a factory in Israel - supply snags that the company is working hard to fix.

"I am a bit disappointed in terms of how we cannot fulfill the customer requirements," Tan said in an interview.

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As to the PC market, "one of the main challenges, basically, is memory," he said. "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. We are not alone - it's just the whole market is impacted."

Intel projects the PC market slump will persist through at least the first half of 2027, and decline 10% next year, following a 12% slide in 2026. Still, longer term, the company is optimistic about demand for its products and is increasing its spending on new equipment to boost production. It's growing more confident it will attract orders from other chipmakers that want to use its factories to build their components, Tan said.

Intel shares fell about 21% in late trading after the report was released. The stock had more than doubled this year through the close, with investors betting that the company will emerge as a key AI beneficiary. The increasing deployment of artificial intelligence services has created demand for Intel's general-purpose chips, allowing it an entry into a market dominated by the technology of Nvidia Corp.

"Intel's earnings highlight the challenges the company faces in pushing its recent turnaround into a sustained recovery," Emarketer senior analyst Asa Hiken said in a note. Though demand for server processors is booming, "Intel's disappointing outlook shows that strong demand alone isn't enough to overcome its near-term challenges, particularly ongoing weakness in its traditional PC business," he said.

Intel has been pursuing a turnaround under Tan, who took the helm in March 2025. He has improved the chipmaker's finances, cut jobs and attracted major outside investors - including Nvidia and the US government. More recently, the company offered new stock to further support its comeback.

Intel still is working to restore its technological leadership, something that once made it the envy of Silicon Valley. The company also is seeking major customers for its chip foundry business, which relies on its factories to make products for outside clients.

Intel executives said they expect spending on new plants and equipment to be about $20 billion in 2026 - and then increase significantly next year. On a conference call with analysts, Chief Financial Officer Dave Zinsner described 2027 as an "investment year" for Intel as it tries to improve output to meet rising demand. That will be particularly true for data center products, he said. The company will likely not generate free cash flow in that period, Zinsner said.

In the fourth quarter, the shutdown of a plant in Israel will cost $300 million in lost revenue. The company is anticipating a similar shortfall in the first three months of next year, Zinsner said. The factory, which experienced a fire, has been closed for two weeks but will begin running again in the next few days. Chips take about three months to go from raw silicon to finished components. A power outage while silicon wafers are inside a machine often causes them to be scrapped.

Third-quarter sales rose 21% to $16.5 billion, in line with analysts' average estimate. Earnings were 52 cents a share in the period, which ended Sept. 26. Analysts projected 41 cents.

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Intel's data center and AI unit had revenue of $7.3 billion, a gain of 78%. Sales in the client division, which makes chips for personal computers, declined 5% to $8.1 billion.

The mixed picture shows the effect that the AI boom has had on Intel's business. Though data center infrastructure is fueling demand for Intel processors, it also has led to a shortage of memory chips - a type of semiconductor made by Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. That, in turn, has forced up the price of laptops and desktops, and reduced demand for the Intel chips that go into those products.i

Intel's foundry unit had sales of $6.7 billion, an increase of 58% from the period a year earlier. That business is trying to compete in a market dominated by Taiwan Semiconductor Manufacturing Co. The hope is to win enough outside customers to offset the massive cost of building chip factories and make Intel's facilities more profitable.

Intel's third-quarter gross margin, the percentage of revenue remaining after deducting the cost of production, was 43%. That benchmark shows the health of a company's chipmaking operations in a costly and competitive industry. Intel projected the margin will narrow to 38% in the current period.

Though Intel now has enough of a financial cushion to weather downturns, such as the current PC market slump, it still needs to invest in its technology to stay competitive in the long run. It has lost market share to Advanced Micro Devices Inc. in PC and server chips while also struggling to crack the lucrative AI accelerator category dominated by Nvidia.