Intel Beat Q3 Estimates, Then Guided Down: Two Reasons the Stock Sank

Intel Beat Q3 Estimates, Then Guided Down: Two Reasons the Stock Sank

A Beat Overshadowed by a Weak Outlook

Intel reported third-quarter revenue of $16.51 billion, up 21% from a year earlier, with adjusted earnings of $0.52 per share, beating consensus estimates of about $16.5 billion and $0.40. Yet the shares plunged roughly 20% in after-hours trading, at one point falling below $76 and toward $72.85 from a $92.07 close, after fourth-quarter guidance came in far below Wall Street expectations.

Management Blames Soft PCs and a Fab Shutdown

Finance chief David Zinsner said the PC slowdown would continue at least through the first half of next year, while CEO Lip-Bu Tan said he was disappointed that Intel could not fulfill customer requirements because of supply constraints and the Israel plant shutdown.

Reason One: The PC Slump Is Getting Worse

Client computing sales fell 5% to $8.10 billion, missing estimates near $8.98 billion. Intel expects PC revenue to fall in the mid-twenty percent range in the fourth quarter, with industry demand weighed down by tough comparisons to last year's Windows 10 end-of-support refresh, rising memory prices lifting system costs, and an inventory correction lasting into 2027. The company forecasts a 12% PC market decline in 2026 and a further 10% contraction in 2027.

Reason Two: A Deadly Blast Wipes Out $600 Million

An October explosion at Fab 28 in Kiryat Gat, Israel, killed two people, seriously injured one, and idled the plant for about two weeks. The fab largely makes data center chips on the company's 10-nanometer process. Intel said the outage cuts roughly $300 million from fourth-quarter revenue and another $300 million from the following quarter, about $600 million in total, and trims fourth-quarter gross margin by about 200 basis points. Raw-material shortages added to the supply squeeze.

Strong Data Center Growth Cannot Fill the Hole

Data center and AI revenue surged 78% to $7.3 billion, with operating income more than tripling to $3.04 billion, and foundry revenue rose 16% sequentially to $6.7 billion. But fourth-quarter guidance of $15 billion to $16 billion in revenue and $0.25 in adjusted earnings fell well short of consensus near $17.1 billion and $0.43 to $0.44, implying a shortfall of about 9% at the midpoint. Non-GAAP gross margin is guided to 38%, down from 43% to 44.1% in the third quarter.

What Comes Next: Inventories and the Fab Restart

Investors now watch the pace of the PC inventory correction and whether production at Kiryat Gat ramps back up by the end of the week. If memory pricing stays elevated into 2027 as Tan warned, the downturn could last longer than guided.