By Hamza Faisal
Intel beat Wall Street on its third quarter — and the stock still cratered. The chipmaker reported revenue of $16.51 billion, up 21% from a year earlier, and adjusted earnings of $0.52 a share, well ahead of the roughly $0.40 analysts expected. But a fourth-quarter outlook far below consensus, compounded by a fatal explosion at its factory in Israel, sent shares plunging more than 21% in after-hours trading on Thursday.
It was the latest reminder that for Intel, guidance matters more than the quarter just reported. The company forecast fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings of $0.25 a share — against analyst expectations of about $17.07 billion and $0.43 a share. Shares fell as low as $73.03 after hours, after closing the regular session at $92.07, extending a slide that has already erased about 35% from the stock's June all-time high.
Data centers surge, PCs sag
The quarter showed Intel's turnaround gaining traction where it matters most. Its Data Center and AI segment grew 78% to $7.32 billion, with operating profit jumping to $3.04 billion from $964 million a year earlier — the strongest data-center revenue growth in 15 years, according to chief financial officer David Zinsner. Chief executive Lip-Bu Tan said demand for Xeon server processors remains so strong that unlocking more supply is now the company's top priority.
The PC side told a different story. Revenue in the Client Computing and Physical AI group fell 5% to $8.10 billion, missing estimates of about $8.98 billion, and Zinsner warned the PC slowdown — driven in part by elevated memory costs — would persist at least through the first half of next year. Intel's foundry business, the contract-manufacturing arm central to Tan's revival plan, grew 58% to $6.7 billion.
The blast that hit the outlook
Part of the weak outlook traces to Kiryat Gat, Israel, where an explosion during a gas delivery on October 14 killed two workers and shut the fab for about two weeks. Intel estimates the disruption will cut fourth-quarter revenue by roughly $300 million and gross margins by about 200 basis points, with a similar impact expected in the first quarter. The fab largely produces data-center chips on Intel's older Intel 10 process, and the company is still assessing which wafers are salvageable, though it plans to start ramping production back up by the end of this week.
Zinsner said the company will keep investing to expand capacity and working capital despite the setback. Intel raised its 2026 capital spending forecast to $20 billion from $18 billion in July and said 2027 spending would increase significantly as it builds out manufacturing capacity — a costly bet that investors are watching closely alongside the foundry expansion.
A turnaround still being tested
The sell-off tests confidence in a stock that has more than doubled this year on turnaround hopes and government backing, even after its recent slide. Tan, who has led the company since it fell behind Nvidia in the AI boom, said the results showed improving execution and meaningful progress expanding supply. But with the PC market soft, a fab still recovering, and a guidance bar the company itself just lowered, the market is demanding proof that the data-center momentum can carry the whole company — not just one strong segment.
For now, investors have delivered their verdict: a beat on the past, punished for the future. Intel's next test comes when Kiryat Gat is fully back online and the fourth quarter shows whether the Xeon demand surge can outrun the PC slump and the blast's lingering costs.
