Intel beat its own numbers. Then lost 28.6% of its value in a day
Third-quarter revenue came in at $16.5 billion, up 21%, with data-centre growth the strongest in 15 years. What sank the stock was the outlook: $15-16 billion for the fourth quarter, and a PC slowdown Intel expects to last at least into mid-2027.
On Thursday evening Intel published results that were better than Wall Street had expected. On Friday its shares fell 28.6%. Both of those things are true, and the reason sits in a single line of the release: what the company expects for the next three months.
The quarter itself was good
In its third-quarter results release, Intel reported revenue of $16.5 billion, up 21% on a year earlier. Adjusted earnings per share were $0.52, more than double last year’s $0.23, and the adjusted gross margin rose to 44.1%.
AI did the heavy lifting. The Data Center and AI division brought in $7.3 billion, up 78%, which chief financial officer David Zinsner called the strongest growth in that business in 15 years. Intel Foundry, the contract chipmaking arm, grew 58%.
The sentence that did the damage
The PC division, still Intel’s largest, shrank 5% to $8.1 billion. And Intel does not expect it to recover soon. Zinsner said the PC slowdown should run at least through the first half of next year.
That fed straight into the fourth-quarter guidance: $15 billion to $16 billion in revenue, below the $16.5 billion just reported, and adjusted earnings of $0.25 a share. Investors read it as a sign that server growth, impressive as it is, cannot carry the rest of the company on its own.
A rough day for every chipmaker
Intel had company on the way down. According to Reuters’ closing figures, the Nasdaq fell 2.86% on Friday, its biggest one-day drop since 5 June, and the Philadelphia semiconductor index lost 7.2%. AMD fell 10.9% and Nvidia 4.2%. Amazon’s results, out the same evening, added to a wider worry that big tech is spending on AI faster than it can earn the money back.
Back in July, Intel raised its capital-spending forecast on the back of data-centre demand, and the server business has delivered on that. What changed was everything else. For the wider picture of Friday’s sell-off, see our running markets tracker.
By Oliver Grant
Image: Sixflashphoto / Wikimedia Commons (CC BY-SA 4.0)
