For the eighth quarter running, Intel beat its own targets. A day later, the stock had lost close to 30% of its value.
The chipmaker’s fourth-quarter forecast landed well under what Wall Street had expected, and shares ended Friday at $65.76. The sell-off erased more than $146 billion in market value and was Intel’s steepest one-day fall in over 50 years.
Everything comes back to the outlook
For the fourth quarter, Intel is guiding to revenue between $15 billion and $16 billion. Analysts had pencilled in $17.07 billion, so the $15.5 billion midpoint falls about $1.6 billion short.
The profit outlook is weaker still. Intel projects adjusted earnings per share of $0.25, against the $0.43 that Wall Street had modeled.
Margins are heading down as well. Gross margin measures how much revenue remains after the direct costs of producing a product are taken out. Intel’s non-GAAP Q4 forecast puts it at 38%, compared with 44.1% in the third quarter.
Most of that drop comes from three sources: softer PC demand, manufacturing constraints that limit how many server processors Intel can ship, and an accident at one of the company’s plants in Israel.
Customers want the chips. Intel can’t make enough
That leaves Intel in a strange spot. Buyers building out AI infrastructure are queuing for its processors, yet the company lacks the capacity to meet those orders. Meanwhile its traditional PC business is under pressure, and the factories it depends on for a lasting turnaround are extremely expensive to operate.
The data center figures show how much is riding on this. Revenue in Intel’s Data Center and AI division rose 78% from a year earlier to $7.3 billion, with $3 billion in operating profit for a 42% margin.
The quarter was solid across the board. Total revenue climbed 21% year over year to $16.5 billion. Adjusted earnings per share reached $0.52, beating both Intel’s guidance of $0.38 and the $0.40 Wall Street consensus. According to Chief Financial Officer Dave Zinsner, this marked the eighth quarter in a row that the company topped its financial expectations.
Positive cash flow is off the table for next year
Zinsner described 2027 as an investment year and warned investors against expecting positive free cash flow, which is the cash a company has left after covering operating costs and capital spending on equipment and infrastructure. Intel is choosing to sacrifice near-term cash generation to fund a larger manufacturing footprint.
“Probably not a dynamic where we are going to have positive free cash flow next year,” Zinsner said during the earnings call.
He said Intel is targeting a return on invested capital of at least 20% from its manufacturing node investments, while conceding that several big projects will require heavy spending simultaneously.
The foundry plan that sent shares to $130
The goal of this spending is to rebuild Intel’s manufacturing arm into a real rival to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s top contract chipmaker. Under this foundry model, Intel would produce chips for outside clients in addition to its own products.
Some big names have joined. Nvidia put $5 billion into Intel in September 2025 and agreed to co-develop custom processors for PCs and data centers. The deal brought Intel fresh capital and linked its processors to Nvidia’s AI platform.
Central to Intel’s push to regain technology leadership is its 18A process, the manufacturing technology used for chips like Panther Lake.
Apple lifted hopes even higher. A preliminary deal for Intel to build some of Apple’s chips helped carry the stock past $130 in May. Should it be finalized, Intel would gain a major new customer as Apple looks to spread production across more suppliers.
At $65.76, shares have surrendered roughly half of that high. Intel now has to ramp up manufacturing output, cope with a contracting PC market and fund a costly expansion all at once before investors can count on steady cash from the company.