Intel stock prices fell roughly 15% during late trading sessions after the company reported fourth-quarter revenue that fell below expectations, driven by weaker demand for personal computer processors and supply chain disruptions in its data center operations. The projected revenue range of $15 billion to $16 billion missed analyst projections, which had averaged around $17 billion and in some cases exceeded $18 billion. The company’s adjusted earnings per share were forecast at $0.25, below Wall Street’s estimate of $0.43. Intel disclosed these figures in a statement on Thursday (Oct 29), marking a notable divergence from investor expectations.
Memory shortages cripple PC industry
These results reflect deeper struggles within the PC market, where manufacturers of laptops and desktops continue to face memory chip shortages and higher component costs. Intel’s CEO, Tan Lip-Bu, acknowledged in an interview that memory prices have risen sharply, creating what he described as a “very severe issue to all of us” for the entire industry.
He specifically noted that the shortage stems from limited production capacity at key suppliers like Samsung Electronics, SK Hynix, and Micron Technology, whose memory chips are essential for PC manufacturing. Tan expects these conditions to persist through 2027, with Intel forecasting another 10% decline in PC market demand following a 12% contraction in 2026. The CEO emphasized that the issue is industry-wide, stating, “Memory pricing went up a lot,” and warned that the problem will remain acute for at least the first half of 2027.
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The data center segment, a major revenue source, also encountered difficulties. Production halts at a facility in Israel and shortages of raw materials constrained performance, though the company is actively addressing these issues. Tan expressed frustration over the inability to meet customer needs, stating, “I am a bit disappointed in terms of how we cannot fulfill the customer requirements.” The data center and AI segment generated $7.3 billion in third-quarter sales, an increase of 78% compared to the same period last year. However, the client division—covering PC chips—reported a 5% decline in revenue to $8.1 billion. These supply chain issues, including the Israel factory shutdown, have delayed shipments and limited Intel’s ability to capitalize fully on the booming AI infrastructure demand.
AI growth clashes with PC decline
These mixed outcomes show Intel’s difficulty in balancing growth in high-demand sectors like AI with ongoing struggles in its traditional PC business. While third-quarter revenue rose 21% to $16.5 billion, matching analyst expectations, the company’s gross margin, 43% in the last quarter, is projected to drop to 38% in the current period. Rising production costs, combined with competition from Taiwan Semiconductor Manufacturing in foundry services and Nvidia in AI hardware, are key factors behind this decline. Earnings in the third quarter were $0.52 a share, which ended September 26, exceeding analyst projections of $0.41, though the fourth-quarter outlook remains weak.
Since assuming leadership in March 2025, Tan has overseen a financial recovery through cost-cutting measures and secured major investments, including commitments from Nvidia and the U.S. government. The company also raised capital via a new stock offering to support its recovery efforts. However, regaining technological leadership remains a significant hurdle. Intel has lost market share to Advanced Micro Devices in both PC and server chip markets while also struggling to crack the lucrative AI accelerator category dominated by Nvidia. The foundry business, which utilizes Intel’s manufacturing facilities to produce chips for other companies, expanded by 58% in the third quarter, reaching $6.7 billion in revenue. This growth reflects Intel’s strategy to attract external clients, though competition with TSMC remains fierce.
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