By Intel shares INTC plunged about 26% in premarket trading on Friday after the chipmaker issued a weaker-than-expected fourth-quarter revenue forecast, citing continued weakness in the global personal computer market and manufacturing constraints.
The decline followed the company’s third-quarter earnings report, which showed adjusted earnings per share of 52 cents, beating analysts’ expectations of 40 cents.
Revenue came in at $16.51 billion, slightly above the $16.5 billion consensus estimate.
However, investors focused on the outlook for the December quarter.
Intel expects revenue of between $15 billion and $16 billion, well below the $17.1 billion forecast by analysts tracked by FactSet.
The company also expects PC chip revenue to decline in the mid-20% range in the fourth quarter, following a 5% drop to $8.10 billion in the September quarter.
If the premarket losses hold, Intel would record its biggest one-day share-price decline in more than two years.
The company is also on track to lose more than $100 billion in market capitalisation, which would represent its largest single-day market value decline on record, according to Dow Jones Market Data.
Intel finance chief David Zinsner said the weakness in the PC market was expected to persist into next year.
“We see the PC slowdown continuing at least through the first half of next year,” Zinsner said in the earnings release.
“We will continue making disciplined investments in capacity and working capital to increase supply and support future growth.”
Manufacturing disruptions add to PC market weakness
Intel’s forecast also reflects the impact of an explosion at a fabrication plant in Israel earlier this month that killed two workers and seriously injured a third.
The incident is expected to cost the company about $600 million in lost revenue over two quarters, Zinsner said during Thursday’s earnings call.
Chief executive Lip-Bu Tan described the incident as an “unfortunate and tragic accident” that caused an “extended shutdown” at the facility, affecting shipments of 10-nanometre chips.
The company is facing additional pressure from rising memory-chip prices, which have made PCs more expensive, while tighter information technology budgets are also weighing on demand.
Like other major technology companies, Intel has been investing heavily in manufacturing capacity.
However, supply disruptions have limited its ability to capitalise on demand for data-centre chips.
“I’m disappointed that we were not able to meet strong customer demand in this quarter,” Tan said on a conference call with analysts.
“We face near-term challenges, including manufacturing supply shortages, the unprecedented memory crunch, and the resulting softness in PC demand.”
Analysts cut price targets as market-share concerns grow
The weak outlook prompted several analysts to reassess their expectations for Intel, with concerns extending beyond the near-term PC market slowdown to its competitive position in processors and foundry services.
BofA Securities downgraded Intel to Neutral from Buy and cut its price target to $100 from $145.
The firm said Intel had not demonstrated sufficient progress in attracting external foundry customers.
It expects PC shipments to decline 25% to 30% quarter-on-quarter in the fourth quarter, with further inventory correction likely during the first half of 2027.
BofA noted that Intel’s data-centre CPU business was performing well amid rising demand for agentic applications, but supply constraints related to substrates were limiting growth.
It also said Intel’s products were not yet technically competitive with AMD and ARM-based rivals, which were growing two to four times faster.
The firm acknowledged Intel’s longer-term potential to build a competitive domestic foundry operation, adding that evidence of progress could support a recovery in the stock.
However, near-term weakness in PC and foundry operations was offsetting strength in data-centre demand.
Roth Capital analyst Suji Desilva also downgraded Intel to Neutral from Buy and slashed the price target to $70 from $120.
Morgan Stanley analysts led by Joseph Moore said Intel’s stock remained unattractive even after the steep decline.
They expect the company to lose market share to fabless competitors with lower capital spending requirements.
Advanced Micro Devices, Nvidia, Graviton and Axion are expected to materially outgrow Intel’s 30% market growth rate in CPUs in 2027.
Jefferies analysts led by Blayne Curtis, meanwhile, viewed the revenue reset as less concerning because it was driven by weaker PC demand rather than a deterioration in the data-centre and AI business.
However, they warned that Intel could continue losing market share next year, “making it tough to underwrite the longer-term story even with Foundry/packaging customer announcements.”
AI business offers a longer-term counterpoint
Despite the negative outlook, some investors see Intel’s expanding data-centre business and foundry ambitions as potential drivers of a longer-term recovery.
Nicholas Mugalli of World Trade Securities said the company’s AI business was growing while its traditional PC operations were contracting.
“The AI side of Intel is booming, and the old PC side is shrinking. For now the old side is bigger, so it wins the guide. Note too that $0.17 of this quarter’s EPS came from a mark-to-market gain, not the business imo.”
Mugalli argued that investors were focusing too heavily on near-term weakness while overlooking the company’s longer-term opportunities.
“We think the market is punishing the right problem with the wrong time horizon. PCs will recover. Data center growing 78% and a foundry growing 58% are the future of this company. A 20% drop in prices is the bad news. It doesn’t price in the turnaround,” he said, maintaining an Overweight rating and a $130 price target.
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