The quarter just reported was not the problem. Intel earned an adjusted 52 cents a share in the third quarter, above the 40 cents in an LSEG poll of analysts, on revenue of $16.51 billion that edged past the $16.5 billion estimate and ran 21% higher than the $13.7 billion of a year earlier.
The outlook is what moved the stock. For the current quarter the company pointed to revenue between $15 billion and $16 billion and adjusted earnings of 25 cents a share, against $17.1 billion and 43 cents in the same LSEG poll. CNBC reported the shares dropped about 20% in extended trading on Thursday.
Key numbers
- 52 cents adjusted third-quarter earnings per share, above the 40 cents in the LSEG analyst poll
- $8.1 billion revenue in the client computing and physical AI unit, down 5% from a year earlier and under estimates
- $7.3 billion data center and AI revenue, 78% higher than a year earlier
- 25 cents adjusted earnings per share guided for the current quarter, against 43 cents in the LSEG poll
The two halves of the company went opposite ways
Data center and AI sales grew 78% from a year earlier, to $7.3 billion. The unit built around PC chips, which Intel calls client computing and physical AI, shrank 5% to $8.1 billion and fell short of estimates. It is still the bigger of the two lines.
Finance chief David Zinsner said the weakness in PCs looks set to run at least into the first half of next year, while describing himself as optimistic about the rest of the product range and committed to measured spending on capacity and working capital. Chief executive Lip-Bu Tan said long-term demand for the company's CPUs and wider computing platforms is holding up despite the near-term pressure on the PC industry.
Counterpoint Research counted a 4% fall in global PC shipments in the second quarter from a year earlier, which it attributed to rising prices for memory and other components, according to CNBC. MarketWatch described the same squeeze from the buyer's side: costlier memory chips weigh on demand, and corporate IT departments have less money for laptops.
In plain words: memory is a part that every PC maker has to buy. When it gets more expensive, finished laptops either cost more or earn their makers less, and fewer of them get built. Intel sells the processor that goes into those machines, so a slower build rate lands straight in one of its two main revenue lines.
The stock was already giving back October gains
Intel rose about 150% over the course of this year before Thursday's results, then gave back roughly 23% during October as questions grew about the scale of the artificial intelligence buildout, CNBC reported. MarketWatch framed the after-hours move as the stock's steepest in two years.
The manufacturing side did not drive the reaction. Intel is the only US-based maker of advanced logic chips and is running its 18A process at high volume from its new Arizona plant, though the company remains the chip's one major customer. Oracle said this week it had widened a deal to deploy Intel's next-generation Xeon server processors, alongside rack-scale systems from Nvidia and AMD, as it adds data center capacity. Intel completed a $23 billion equity offering in August.
What to watch
- Next week AMD reports quarterly results
- Mid-November Nvidia is scheduled to report results
- End of 2028 Intel's next Arizona fab is expected to begin operations