Intel shares plunge on weak forecast as PC slump deepens

Intel ↘ 3.62% shares fell more than 20% in extended trading on Thursday, Oct. 29. The chipmaker forecast fourth-quarter revenue and profit well below Wall Street estimates, citing a long PC slowdown and a factory explosion in Israel. The outlook overshadowed a strong third quarter and could test a stock that has risen about 150% this year, though it was already down roughly 23% in October before the report.cnbc.com+1

Guidance falls short

Intel expects fourth-quarter revenue of $15 billion to $16 billion and non-GAAP earnings of 25 cents per share. It also forecast a 38% adjusted gross margin. Analysts polled by LSEG London Stock Exchange Group plc had expected about $17.07 billion in revenue and 43 cents a share. Bloomberg said some analysts had projected more than $18 billion.calcalistech.com+2

"We see the PC slowdown continuing at least through the first half of next year," Chief Financial Officer David Zinsner said. A memory chip shortage has pushed up component prices and cut demand for laptops and desktops. Intel expects the PC market to shrink 12% this year and another 10% in 2027.thenextweb.com+1

Zinsner told Reuters that the October explosion at Intel's fab in Kiryat Gat, Israel, will cut fourth-quarter revenue by about $300 million and gross margins by about 200 basis points. He expects a similar revenue hit in the first quarter. The plant mostly makes data center chips on the Intel 10 process and was shut for two weeks, and the company is still working out which wafers can be saved.investing.com

A strong quarter overlooked

Revenue for the quarter ended Sept. 26 rose 21% to $16.51 billion, in line with estimates. Adjusted earnings of 52 cents a share beat the 40-cent forecast. Data center and AI revenue jumped 78% to $7.3 billion. Sales in the client computing group fell 5% to $8.1 billion, missing estimates. It was Intel's highest quarterly revenue since 2022.oregonlive.com+2

CEO Lip-Bu Tan said the company's "immediate priority is to unlock additional supply to meet extraordinary demand for our Xeon family".oregonlive.com

Turnaround under pressure

The miss comes as Tan works to revive the company's foundry business. Intel raised $23 billion through a share offering in August and lifted its 2026 capital spending forecast to $20 billion. Intel is producing its 18A chips in Arizona as an alternative to TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 1.75%, but it is still the only major customer for that process.cnbc.com+1

Tan sees more trouble ahead from memory costs. "I think my prediction is that in 2027 it is going to be a very severe issue to all of us," he told Bloomberg.thenextweb.com