Intel Shares Plunge 20% on Weak Fourth-Quarter Forecast Despite Q3 Beat

Intel shares plunged roughly 20% in extended trading on Thursday after the major chipmaker issued a fourth-quarter revenue and earnings forecast that fell well short of Wall Street projections. The weaker-than-expected guidance completely overshadowed a solid third-quarter financial report that featured a profit beat and massive growth in data center processors.

For the third quarter, Intel reported adjusted earnings of $0.52 per share, beating the consensus estimate of $0.40. Total revenue rose 21% year over year to $16.51 billion, slightly exceeding analyst expectations of $16.48 billion. The company pointed to robust demand for server central processing units as a primary driver of the positive quarterly results.

However, the outlook for the final quarter of the year pointed to significant headwinds. Intel forecast fourth-quarter revenue between $15 billion and $16 billion, missing Wall Street expectations of roughly $17.08 billion. Adjusted earnings per share are projected to reach only $0.25, compared to the analyst consensus of $0.44.

Chief Financial Officer David Zinsner stated that the company expects personal computer market weakness to persist through at least the first half of next year. Revenue from Intel's Client Computing and Physical AI Group fell 5% year over year to $8.1 billion in the third quarter. Global PC shipments have faced pressure due to soaring costs for memory and other vital components.

Compounding the near-term challenges, Zinsner noted that an explosion earlier this month at an Intel fabrication plant in Israel will cost the company about $600 million in lost revenue over two quarters. Chief Executive Lip-Bu Tan called the incident an unfortunate and tragic accident that caused an extended shutdown affecting 10-nanometer chip shipments.

Despite the pressures on the traditional PC business, other segments showed notable strength. Revenue from Intel's Data Center and AI segment surged 78% year over year to $7.3 billion, marking the strongest data center revenue growth the company has experienced in 15 years. Meanwhile, Intel Foundry revenue increased 58% to $6.7 billion.

As management navigates these contrasting market trends, executives emphasized a disciplined approach to capital spending and manufacturing capacity. While investors continue to assess whether the foundry division can attract enough external customers to sustain its long-term strategy, the market has focused heavily on the cautious fourth-quarter forecast as the primary indicator for the company's near-term trajectory.