Intel shares fell about 30% in regular trading on Oct. 30 after the chipmaker's fourth-quarter outlook eclipsed a stronger-than-expected rise in data center revenue. The company forecast quarterly sales of $15 billion to $16 billion, well below the roughly $17.1 billion market expectation cited in the materials, while projected adjusted earnings of $0.25 a share compared with a consensus estimate near $0.44.
The selloff accelerated after the opening bell, following a premarket decline of about 25%. Intel's guidance pointed to a sharper deterioration in its PC-facing business than the company's third-quarter numbers initially suggested, placing renewed pressure on a turnaround strategy that depends on recovering client demand, expanding AI-related sales, and reducing losses at its contract chip manufacturing arm.
Intel reported third-quarter revenue of $16.5 billion, up 21% from a year earlier. Growth was led by its Data Center and AI division, where revenue reached $7.3 billion, a 78% annual increase and a substantial step up from roughly $6.3 billion in the second quarter.
Yet the company's larger Client Computing business, which includes PC processors and AI PC products, generated $8.1 billion in the quarter, down 5% from a year earlier. The division remains Intel's biggest source of revenue, so management's forecast of a more than 20% sequential decline in client revenue for the fourth quarter carried greater weight with traders than the data center rebound.
Pc weakness weighs on Intel's outlook
Intel said weak PC demand is likely to persist through at least the first half of 2027 as computer makers adjust inventories to softer end-market sales. That outlook suggests that the industry's push to market PCs with on-device AI features has yet to produce a broad replacement cycle strong enough to offset cautious purchasing by consumers and businesses.
The company said revenue tied to AI PCs rose 35% year over year in the third quarter. That gain indicates demand for newer systems capable of running certain AI tasks locally, rather than entirely through cloud services. But the increase was insufficient to prevent an overall decline in Intel's client segment, where conventional PC demand remains much larger.
Component costs have added another complication. Intel said memory suppliers are directing capacity toward high-bandwidth memory and other products used in AI servers, tightening availability and raising costs for components used in PCs. The shift illustrates how the AI infrastructure buildout is affecting the rest of the semiconductor supply chain: companies selling servers and accelerators are benefiting from surging demand, while PC makers face a more constrained and expensive component market.
Intel also disclosed shortages involving substrates, memory and other parts that are affecting product shipments. In its data center business, the company said some demand for central processing units remains above the supply it can deliver. Strong order activity can support future sales, but supply limitations mean that demand does not immediately translate into recognized revenue.
Foundry losses narrow, but external business remains limited
Intel Foundry, the company's contract manufacturing division, reported $6.7 billion in third-quarter revenue, up 58% year over year. Its operating loss narrowed to about $1.85 billion from roughly $2.09 billion in the second quarter, offering evidence that cost controls and production improvements are beginning to reduce the scale of the division's losses.
The division's revenue figure still largely reflects Intel's own internal chip production rather than a mature external foundry business. External foundry revenue was $411 million, or about 6% of total foundry sales, according to the company's disclosures. Intel also said external foundry growth during the quarter was driven mainly by a non-recurring contract, limiting the extent to which the result can be viewed as evidence of recurring customer demand.
Intel said costs associated with its 18A manufacturing process had fallen about 40% from the first quarter, alongside improved production yields and cycle times. The 18A process is central to Intel's effort to regain manufacturing competitiveness and attract outside chip designers. The economics of that plan depend on bringing in more long-term external orders and raising factory utilization as customers move from testing chips on the process to volume production.
That makes the fourth-quarter outlook particularly difficult for the company. Intel is trying to fund advanced manufacturing expansion while its core PC business expects a pronounced near-term decline. A stronger data center division and lower foundry losses may soften the financial strain, but neither has yet replaced the client business as the main driver of earnings.
Analysts cut expectations after outlook
Bank of America downgraded Intel to neutral from buy following the results and reduced its price target to $100 from $145. The bank's move followed the company's lower-than-expected fourth-quarter guidance, despite the sharp annual growth in data center revenue and progress in narrowing foundry operating losses.
The market reaction reflects concern that Intel's recovery remains uneven. Its data center business is improving as AI infrastructure spending supports demand for processors, while its manufacturing operation is becoming less loss-making. The company's near-term earnings outlook, though, remains tied to a PC market Intel expects to weaken further and to supply constraints that limit shipments even where demand is available.
Claims in the supplied material linking Intel's results directly to cryptocurrency prices, crypto fund flows or token trading strategies are not supported by Intel's earnings release. The company's report instead centers on semiconductor demand, PC inventories, component availability and the economics of its foundry expansion.
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