Intel Shares Tumble Over 20% Following Weak Fourth-Quarter Forecast

Intel shares dropped more than 20% in extended trading on Thursday after the chipmaker issued a disappointing outlook for the fourth quarter. Company executives pointed to ongoing weakness in the personal computer market and operational disruptions following a fatal factory accident.

Overall third-quarter revenue grew 21% from $13.7 billion a year earlier. However, the client computing and physical AI division saw revenue slip 5% year-over-year to $8.1 billion, missing market estimates. Data center and AI sales offered a bright spot, surging 78% to reach $7.3 billion during the same period.

Weakness in consumer electronics continues to weigh on the industry. According to Counterpoint Research, global PC shipments fell 4% year-over-year in the second quarter, driven by rising costs for memory and other hardware components.

Sluggish PC Demand and Factory Shutdown

For the fourth quarter, Intel projects revenue between $15 billion and $16 billion, with adjusted earnings per share expected at 25 cents. These figures fell well short of Wall Street estimates compiled by LSEG, which anticipated $17.1 billion in revenue and earnings of 43 cents per share.

“We see the PC slowdown continuing at least through the first half of next year,” said Intel Chief Financial Officer David Zinsner. “We will continue making disciplined investments in capacity and working capital to increase supply and support future growth.”

Financial results were also hindered by a fatal explosion at a manufacturing facility in Israel earlier this month that killed two workers and severely injured a third. CEO Lip-Bu Tan called the event an “unfortunate and tragic accident” that resulted in an “extended shutdown” affecting 10-nanometer chip shipments. Zinsner confirmed the incident will hit revenue by approximately $600 million across two quarters.

Long-Term Foundry Strategy and AI Demand

Despite current obstacles, Intel is expanding its domestic manufacturing footprint as the sole U.S.-based producer of advanced logic chips. High-volume production of its flagship 18A chip is underway at a new facility in Arizona, offering an alternative to Taiwan Semiconductor Manufacturing Co., while a second Arizona plant is slated to open by the end of 2028.

Intel is working to secure major outside buyers for its foundry services. “We’re going to have a couple of customers ready to announce the next two quarters,” Tan said during the conference call, adding that development on upcoming 14A chips is making substantial headway.

Capital investments remain heavily monitored following last year’s moves, which saw the Trump administration take a 10% stake in Intel alongside multi-billion-dollar investments from Softbank and Nvidia. Intel also raised funds through a $23 billion equity offering in August to support its manufacturing push and capitalize on broader demand for artificial intelligence hardware.