Intel's stock tumbled more than 20% in after-hours trading Thursday following disappointing revenue projections that undershot analyst consensus. The company attributed the shortfall to ongoing memory chip scarcity hampering PC sales and supply chain complications within its data centre division.
For the fourth quarter, Intel projects revenue between $15B and $16B, trailing the $17B average forecast from Wall Street. The company also guided adjusted earnings per share at 25 cents, well below the anticipated 43 cents per share.
The personal computer market faces structural headwinds from elevated memory chip costs. Manufacturers are grappling with insufficient supply of memory components, which has inflated prices and suppressed demand across laptops and desktop systems. Intel anticipates the PC market will contract by 12% this year, followed by a further 10% decline in 2027. According to research firm TrendForce's September analysis, PC manufacturers have reached their ceiling for memory chip expenditures.
Memory pricing went up a lot. I think my prediction is that in 2027 it is going to be a very severe issue to all of us
Intel chief executive Lip-Bu Tan, speaking to Bloomberg
Tan acknowledged that the data centre segment would have delivered stronger performance absent material shortages and a manufacturing facility closure in Israel.
Despite the cautious outlook, Intel's third-quarter performance demonstrated underlying strength. Total revenue expanded 21% year-over-year to $16.5B. Data centre and artificial intelligence revenues surged 78% to $7.3B, though PC chip sales declined 5% to $8.1B. This quarter's results represent the strongest expansion in over a decade.
Intel's equity had more than doubled throughout the year as market participants anticipated significant gains from artificial intelligence adoption. The company recently completed a $15B share offering to finance its strategic transformation under Tan's leadership.
Source: The Next Web
