Intel shares plunge 21% as weak PC demand and supply shortages hit revenue outlook

Intel's fourth-quarter revenue forecast proved pessimistic, prompting a 21% drop in its shares in late trading. The company faced weakening demand for personal computers and supply chain disruptions impacting its data center business. Analysts estimated Intel's fourth-quarter sales to be $15 billion to $16 billion, while Wall Street projected $17 billion, with some projections reaching $18 billion.

Intel's profit for the quarter was expected to be 25 cents a share, excluding certain items, while Wall Street anticipated adjusted earnings of 43 cents a share. Intel's chief executive, Lip-Bu Tan, expressed disappointment in the company's inability to meet customer demands, attributing the issue primarily to soaring memory prices.

Tan predicted that the PC market slump would continue through at least the first half of 2027 and decline by 10% in the following year, following a 12% drop in 2026. Despite the current challenges, Intel remains optimistic about long-term demand for its products and is increasing investments in new equipment to boost production.

The company expects to attract orders from other chipmakers for its factories. Intel's earnings highlight the difficulties in sustaining recovery in the face of ongoing weakness in traditional PC business, particularly amidst the strong demand for server processors. Asa Hiken, a senior analyst at Emarketer, stated that strong demand alone is insufficient to overcome near-term challenges, especially in the traditional PC market.

Intel has been implementing a turnaround strategy under Tan's leadership, improving the company's finances, cutting jobs, and attracting major investors. The company is also expanding its foundry business and investing $20 billion in new plants and equipment in 2026, with significant growth expected in the following year. Third-quarter sales rose 21% to $16.5 billion, meeting analysts' estimates, but the data center and AI unit grew by 78%, while sales in the client division declined by 5% to $8.1 billion.