Intel's stock plummeted 19% due to a weak outlook. The company blames the decline on the PC market

Intel shares fell more than 19% in after-hours trading. The reason was a weaker-than-expected revenue and profitability forecast, according to the Financial Times. The forecast was affected by a decline in demand for personal computer processors and disruptions in the supply chains for data center components.

Intel's third-quarter revenue totaled $16.5 billion, in line with analysts' expectations. For the current quarter, the company forecast revenue in the range of $15 billion to $16 billion. Analysts had expected an average of $17 billion, with some forecasts exceeding $18 billion, according to Bloomberg. Earnings per share, excluding one-time items, will be $0.25, compared with Wall Street’s consensus estimate of $0.43.

The main source of pressure is a sharp downturn in the PC market: laptop and desktop computer manufacturers are facing a shortage of memory chips and rising component prices, which are reducing both supply and consumer demand, according to Bloomberg.

“One of the main problems is memory. Prices for it have risen sharply. According to my forecast, this will become a very serious problem for all of us in 2027—the entire market is suffering,” said Intel CEO Lip-Bu Tan. The company expects the downturn in the PC market to last at least until the first half of 2027 and to amount to 10% next year, following a 12% decline in 2026.

Intel warned that, due to rising costs amid a memory chip shortage, its gross margin for the current quarter will drop to 37% from 43% in the third quarter. Tan said the company is “moving as quickly as possible” to expand shipments and boost chip sales.

The division that manufactures server and personal computer processors generated $15.4 billion in revenue, in line with forecasts. Revenue from contract manufacturing totaled $6.7 billion.

Intel's capital expenditures for the quarter totaled $4 billion, and the company has committed to spending $20 billion by 2026. Net income for the quarter reached $3.3 billion. This figure reflects the volatility in the value of Intel shares held in an escrow account as part of a transaction with the U.S. government; adjusted net income was $2.8 billion.

This is Intel's first quarterly report since the company raised $20 billion through a new stock offering in August. The chipmaker had hoped to capitalize on the sharp rise in its stock price following its second-quarter report, in which revenue posted its fastest growth in 15 years.

Tan, who took the helm at Intel in 2025, is striving to strengthen Intel's financial position following years of decline caused by unchecked spending on manufacturing capacity, which has yet to attract major external customers and prevents the company from competing with TSMC.

Since the beginning of the year, Intel’s stock has risen by more than 140% as investors bet that the company will be one of the beneficiaries of the AI boom: growing demand for AI services is increasing the need for its general-purpose processors and opening up access to a market dominated by Nvidia’s technologies. However, over the past month, the stock has lost more than 20% due to investor concerns about rising inflation, the sustainability of the data center boom, and the aggressive borrowing to finance AI projects.

Intel's position began to improve after the Donald Trump administration last year supported its goal of becoming the only U.S. company capable of producing cutting-edge chips for artificial intelligence. The U.S. government converted billions in federal manufacturing subsidies into a 10 percent stake in Intel. This was followed by multibillion-dollar investments from Nvidia and SoftBank. Elon Musk has also stated that SpaceX and Tesla will collaborate with Intel as part of its Terafab plant project in Texas.

This article was AI-translated and verified by a human editor