Intel Sinks After Hours as Q4 Guidance Misses and PC Weakness Offsets a 78% Data Center Surge

Intel (INTC) shares fell sharply in after-hours trading on Oct. 29 after the chipmaker guided fourth-quarter revenue to $15 billion to $16 billion, below the roughly $17 billion analysts expected, and adjusted earnings of $0.25 per share, well under the $0.43 estimate. Intel also guided gross margin to 38%, down from about 43% in the third quarter. The third quarter itself was solid: revenue rose 21% to $16.5 billion, in line with estimates, and adjusted EPS of $0.52 beat the roughly $0.41 expected. The stock had risen roughly 150% this year before the report.

The quarter and the outlook

At the midpoint, the revenue guide implies roughly a 6% sequential decline, and the EPS guide sits about 42% below the consensus estimate, by our calculation.

PCs: a shrinking market through 2027

Memory shortages driven by AI demand and rising component prices are reducing PC shipments and processor demand. Intel expects the PC market to shrink 12% in 2026 and another 10% in 2027, with weakness lasting through at least the first half of 2027. Client computing revenue fell 5% to $8.1 billion, the segment that has been Intel's largest.

Data center: demand it could not fully serve

Data center and AI revenue jumped 78% to $7.3 billion, but raw-material shortages and a factory shutdown in Israel kept Intel from filling stronger demand. CEO Lip-Bu Tan said the company is working to add capacity. Intel has said it is increasing investment in equipment, clean-room space and substrates, and has pointed to industry-wide substrate and memory shortages as a supply-chain risk. Foundry revenue rose 58% to $6.7 billion.

The turnaround and the competition

Intel's recovery is backed by investments from Nvidia and the U.S. government, and the company is raising manufacturing spending while pursuing external foundry customers. It competes with AMD in processors and TSMC in chip manufacturing. A 38% gross margin would give back much of the improvement of the past year, which makes capacity additions and yields the key measures to follow.

What it means

The report separates Intel into two businesses. The AI-driven data center and foundry side is growing at a pace few expected, while the PC side is being squeezed by the same memory shortage that fuels AI demand. Guidance that falls short on both revenue and profit shows how limited supply and a weak consumer market can hold down earnings even when orders are strong. After a large run this year, expectations were high. See also our look at how AI spending is lifting chip and cloud suppliers in our Alphabet cloud earnings article.

Sources: Intel earnings materials, including second-quarter 2026 results and third-quarter guidance on Intel's investor relations site and in its SEC filings; third-quarter results, guidance, estimates and after-hours moves are from market data. This is informational, not a recommendation to buy or sell.