Intel's stock fell more than 20% in extended trading on Thursday after the chipmaker issued a weak fourth-quarter forecast and reported third-quarter results that missed expectations in key segments, according to the company's press release and earnings call.
The company said third-quarter revenue climbed 21% to $13.7 billion compared with a year earlier. However, revenue in its client computing and physical AI group fell 5% from the same quarter a year ago to $8.1 billion, missing analyst estimates, even as data center and AI revenue jumped 78% to $7.3 billion. For the current quarter, Intel expects adjusted earnings per share of 25 cents on revenue between $15 billion and $16 billion. Analysts polled by LSEG were expecting revenue of $17.1 billion and earnings per share of 43 cents, according to the source material.
Intel finance chief David Zinsner cited the PC slowdown as a key factor. "We see the PC slowdown continuing at least through the first half of next year," Zinsner said in the company's press release. Global PC shipments declined 4% in the second quarter from a year earlier due to soaring costs for memory and other components, according to Counterpoint Research. The company's forecast also reflects an explosion at Intel's fab in Israel earlier this month that killed two workers and seriously injured a third. Zinsner said the incident will cost the company about $600 million in lost revenue over two quarters. CEO Lip-Bu Tan called the explosion an "unfortunate and tragic accident" that caused an "extended shutdown" at the plant, impacting shipments of 10-nanometer chips.
On the foundry business, Tan said Intel would take a disciplined approach to spending. "We will remain disciplined as we invest, and we will not spend $1 of capital unless we have confidence in the health of our products and process technologies, and clear evidence of customer demand," Zinsner said on the call. Tan added that the company expects to have "a couple of customers ready to announce" for its new chips within the next two quarters. Intel is the only U.S.-based manufacturer of advanced logic chips and is now in high-volume production of its most advanced 18A chip out of its new fab in Arizona. "Despite near term headwinds affecting the broader PC industry, we continue to see robust demand for CPUs and more broadly, for all our computing platforms in the long term," Tan said in the press release.
For savers, borrowers and investors, Intel's weak forecast and earnings miss signal that the PC market weakness is persisting longer than expected, which could affect tech sector performance and investment returns.