Intel Stock Plummets 20% Despite Strong Earnings on Disappointing Forecast

Intel's stock experienced a significant drop of approximately 20% in late Wall Street trading following the release of its third-quarter 2026 financial results. While the chip giant surpassed analyst expectations for earnings, its revenue for the fourth quarter was projected to be between $15 billion and $16 billion, falling short of the $17 billion anticipated by analysts. In the third quarter, Intel's revenue reached $16.5 billion, an increase from $13.6 billion in the same period last year, and adjusted earnings per share were 52 cents, exceeding the analyst forecast of around 40 cents. The disappointing future outlook overshadowed the positive quarterly performance, leading to a negative market reaction. A key factor contributing to the discrepancy with expectations was the personal computer segment, where revenue from PC processors was $8.1 billion, below the projected $8.8 billion. The PC market is currently facing a slowdown in sales, partly due to rising memory and storage chip prices, making computers more expensive for consumers. Additionally, a surge in PC purchases last year, partly driven by Microsoft's end of support for Windows 10, is making it difficult to show growth in the current period. Conversely, the data center division performed better than expected, with revenues of $7.3 billion, surpassing the $6.6 billion forecast. Demand for central processing units (CPUs) to power artificial intelligence systems is supporting this segment's activity, driven by the expansion of AI infrastructure. Intel's manufacturing arm, Intel Foundry, also showed substantial growth, with revenues of $6.7 billion, a 58% increase year-over-year and above projections. Reports also indicate that Google has ordered millions of TPU chips from Intel for production, and Nvidia is in discussions with the company. Intel is also exploring a potential lease of space at its Ohio factory with memory maker SK Hynix. Adding to the weak forecast is a supply chain disruption: a fatal, unrelated explosion at an Intel factory in Israel is expected to reduce fourth-quarter revenue by approximately $300 million. This stock decline follows a strong year for Intel, during which its stock price had risen sharply. The company also recently announced its acquisition of Israeli quantum computing firm Classiq for about $2.2-$2.3 billion, a deal not included in the current quarter's results.