Intel Shares Drop About 25% Before the Open After a Weak Fourth-Quarter Forecast and a Warning on PC Sales
Intel guided to $15 billion to $16 billion in revenue against the $17 billion analysts expected, and 25 cents a share against 43 cents. It blames a PC slump, memory chip costs and an accident at its Israel plant.
Intel's stock fell hard Friday after the chipmaker gave a gloomy outlook, Breitbart News reports.
The drop. Shares fell roughly 25% in premarket trading. Breitbart says that threatened to erase more than $120 billion in market value, and it notes the stock had more than doubled this year on hopes tied to the artificial intelligence boom.
The forecast. On Thursday Intel said it expects fourth-quarter revenue of $15 billion to $16 billion, below the $17 billion analysts had expected. It forecast adjusted earnings of 25 cents a share against expectations of 43 cents, and a gross margin of 38%, down from 43% in the third quarter.
The quarter just ended. Third-quarter results were better than expected: revenue of $16.5 billion, up 21% from a year earlier, and adjusted earnings of 52 cents a share. Data center and AI revenue rose 78% to $7.3 billion. PC chip sales fell 5% to $8.1 billion.
The warning. Chief Financial Officer Dave Zinsner said Intel expects global PC shipments to fall about 12% this year and 10% in 2027, with the slump lasting through at least the first half of next year. He said the AI boom is part of the problem: data centers are soaking up memory chips, which pushes up component prices and squeezes PC makers. Intel also cannot make enough server chips to meet demand, because of manufacturing bottlenecks and part shortages. CEO Lip-Bu Tan said, "I'm disappointed that we were not able to meet strong customer demand in this quarter." A deadly accident at Intel's Israel plant earlier this month forced a shutdown that the company expects to cut about $300 million from fourth-quarter revenue, with a similar hit early next year.
The spending. Intel expects about $20 billion in capital spending this year, rising significantly in 2027, and Zinsner said that will likely keep free cash flow from turning positive next year. Zinsner still predicted a PC "renaissance" as AI work moves onto personal devices, though Breitbart notes some analysts doubt it because cloud AI reduces the need for new hardware.
Note for readers: the share figure is a premarket move, not a closing price, and the numbers are company guidance. Under Tan, Intel has restructured and drawn investment that includes backing from Nvidia and the U.S. government, Breitbart says.