Earnings Beat Masked by Disappointing Outlook

Intel reported third-quarter revenue of 16.51 billion dollars, a 21 percent rise from the prior year, with adjusted earnings per share reaching 0.52 dollars. The results surpassed analyst expectations of 16.48 billion dollars in revenue and 0.40 dollars in per-share earnings. Data center and artificial intelligence revenue climbed 78 percent to 7.3 billion dollars, while foundry revenue grew 58 percent to 6.7 billion dollars.

Yet investors zeroed in on what came next. The company guided fourth-quarter revenue to between 15 billion and 16 billion dollars, falling short of the approximately 17.07 billion dollars expected. Adjusted earnings per share were forecast at 0.25 dollars, well below the roughly 0.43 dollars consensus. The outlook also signaled client computing revenue, or PC chip sales, would fall more than 20 percent from the third quarter.

Client computing revenue, which had already slipped 5 percent to 8.1 billion dollars in the latest quarter, faced ongoing headwinds from elevated memory costs and constrained IT budgets.

Manufacturing Setbacks and Industry-Wide Weakness

A production disruption at Intel’s Fab 28 plant in Israel following an October explosion is expected to cut revenue by about 300 million dollars in the fourth quarter and another 300 million dollars in the first quarter of 2027. The setback compounds broader manufacturing constraints, including packaging shortages, that limit the company’s ability to ramp up output for server processors.

Intel forecasts capital expenditures near 20 billion dollars in 2026, with spending rising further in 2027. The company stated it does not expect to generate positive free cash flow next year, describing 2027 as an investment year focused on rebuilding its manufacturing capabilities and competing with leaders such as Taiwan Semiconductor Manufacturing Company.

The decline rippled through the sector. Shares of SK Hynix fell more than 6 percent, SanDisk dropped over 3 percent, and the Philadelphia Semiconductor Index slid 5.7 percent. Nvidia lost 3.3 percent, AMD about 10 percent, and Arm more than 9 percent as the broader Nasdaq fell 2.2 percent and the S&P 500 slipped 1.1 percent.

AI Demand Offers Long-Term Upside

Despite near-term pressures, Intel highlighted strong momentum in its AI business. Data center and artificial intelligence revenue surged to 7.3 billion dollars, supported by robust demand for Xeon processors. The foundry segment also posted healthy gains, reaching 6.7 billion dollars on improved yields from advanced nodes such as Intel 3 and Intel 18A.

Analysts maintained an average overweight rating, with a consensus price target near 120 dollars, reflecting confidence in the company’s turnaround strategy under CEO Lip-Bu Tan. CFO David Zinsner noted server CPU demand tied to AI infrastructure had posted its strongest quarterly growth in 15 years.

Broader Market Impact

The Intel selloff contributed to a wider retreat in U.S. tech stocks. Amazon shares dropped more than 7 percent after its third-quarter sales of 201.9 billion dollars missed expectations, with earnings per share falling 3 percent year over year. The move highlighted concerns about returns on artificial intelligence investments across the sector.

Intel’s stock had climbed roughly 150 percent year to date before the recent slide. Earlier milestones included a 2025 investment of 5 billion dollars from Nvidia and a preliminary agreement with Apple to manufacture some chips. Shares had briefly topped 130 dollars in May after those developments.