Intel Shares Slide 15% as PC Weakness and Supply Delays Cloud Outlook

Intel’s latest results show how sharply its recovery depends on two businesses moving in opposite directions. Demand for data centre processors is rising, but weaker PC sales and production constraints are weighing on the near-term outlook. Shares fell about 15 per cent in late trading after the company forecast fourth-quarter revenue and profit below analysts’ expectations.

Intel expects revenue of US$15 billion to US$16 billion in the quarter. Analysts’ average estimate was US$17 billion, with some projections above US$18 billion. The company forecast adjusted earnings of US$0.25 a share, compared with Wall Street’s expectation of US$0.43.

The gap puts a near-term limit on the optimism that had lifted Intel’s shares. The stock had more than doubled in 2026 through the close before the results, as investors looked to artificial intelligence demand to support a turnaround. Intel’s latest outlook suggests that demand alone may not be enough to overcome weakness in its traditional PC business and difficulties supplying customers.

AI growth meets a weaker PC market

Intel’s third-quarter figures capture that split. Revenue rose 21 per cent to US$16.5 billion, in line with analysts’ average estimate. Earnings were US$0.52 a share for the period ended Sep 26, above the US$0.41 analysts had projected.

The data centre and AI unit delivered the strongest growth: revenue increased 78 per cent to US$7.3 billion. Intel’s client division, which makes chips for PCs, saw sales fall 5 per cent to US$8.1 billion. The figures show that expanding use of AI services is lifting demand for Intel’s general-purpose processors, even as the company remains a smaller force in a market dominated by Nvidia’s technology.

PC makers face their own cost and supply pressures. Memory semiconductor shortages and higher component prices have pushed up the cost of laptops and desktops, weakening purchases and reducing demand for the Intel chips inside them. Chief executive Tan Lip-Bu said memory pricing had risen substantially and predicted the issue would be severe across the market in 2027.

Intel expects the PC slump to last through at least the first half of 2027. It forecasts a 10 per cent decline in the market for 2027, after a 12 per cent slide in 2026. That outlook leaves the company exposed to prolonged weakness in a core business while it tries to capture more of the growth in data centre computing.

Supply constraints cap data centre sales

The data centre business could have performed better, Tan said, if shortages of some raw materials and a factory shutdown in Israel had not restricted production. The company is working to resolve those problems. “I am a bit disappointed in terms of how we cannot fulfill the customer requirements,” Tan said in an interview.

That shortfall matters because strong customer demand can translate into sales only when Intel can deliver the required products. For a company trying to sustain a recovery, supply interruptions also complicate plans to show that growth in AI-related computing can offset the PC downturn.

Intel is increasing spending on equipment to expand production and says it is becoming more confident that other chipmakers will place orders with its factories. Those outside customers are central to its foundry strategy: the business aims to manufacture chips designed by other companies and generate more revenue from Intel’s facilities.

The foundry unit reported third-quarter sales of US$6.7 billion, up 58 per cent from a year earlier. It competes with Taiwan Semiconductor Manufacturing in a market where winning customers is essential to covering the considerable cost of building and operating chip factories. Growth in sales is a useful indicator, but the larger test is whether Intel can attract enough outside business to make those facilities more profitable.

Turnaround still faces execution tests

Intel’s manufacturing costs remain a pressure point. Gross margin, the share of revenue left after production costs, was 43 per cent in the third quarter. The company expects it to narrow to 38 per cent in the current period. In chipmaking, where factories require heavy investment and competition is intense, a lower margin can leave less room to fund technology development and production expansion.

Tan took the helm in March 2025 and has worked to improve the company’s finances, reduce its workforce and bring in outside capital. Intel has also issued new stock to support its recovery. Those steps provide financial support, but they do not by themselves restore the technology lead that once made the company a Silicon Valley standard bearer.

Intel has lost share to Advanced Micro Devices in PC and server chips, while it has yet to establish a strong position in AI accelerators, a category dominated by Nvidia. Its current results therefore combine a fast-growing data centre business with persistent competitive challenges and a PC market that the company expects to contract further.

Emarketer senior analyst Asa Hiken said the results underscored the difficulty of turning recent progress into a sustained recovery. In his view, strong demand for server processors cannot offset the near-term pressure from Intel’s traditional PC business on its own.

The next measure of progress will be whether Intel can convert data centre demand into shipments despite supply constraints, while improving the economics of its foundry operations. Its production investment and hopes for more outside manufacturing customers point to the company’s longer-term ambitions; the weaker fourth-quarter forecast shows how much execution still has to carry that plan.