Intel shares fall after weak Q4 outlook and Israel fab incident
Intel reported third-quarter earnings that beat estimates but warned of a slower fourth quarter, citing a soft PC market and a recent fab explosion in Israel.
Intel's stock dropped in extended trading on Thursday after the company issued a muted fourth-quarter forecast, pointing to ongoing weakness in the global PC market. For the third quarter, the chipmaker posted adjusted earnings of 52 cents per share on revenue of $16.51 billion, roughly matching analysts' expectations. Revenue grew 21% year over year, driven by a 78% jump in data-center and AI sales to $7.3 billion, while the client computing and physical AI segment fell 5% to $8.1 billion.
For the upcoming quarter, Intel projected adjusted earnings of 25 cents per share on revenue between $15 billion and $16 billion, below analysts' forecasts of $17.1 billion in revenue and 43 cents in earnings per share, according to LSEG data.
"We see the PC slowdown continuing at least through the first half of next year, but we remain optimistic about the opportunities across our broader portfolio," finance chief David Zinsner said in the release.
The outlook also reflects the impact of an explosion at Intel's Israeli fab that killed two workers and injured a third. Zinsner told Reuters the incident would cost about $600 million in lost revenue over two quarters and that production is expected to resume by the end of the week.
CEO Lip-Bu Tan added that, despite near-term headwinds in the PC industry, the company continues to see strong long-term demand for its CPUs and broader computing platforms.
Intel's foundry business remains in a development phase, with high-volume production of its 18A chip underway at a new Arizona facility and plans for a second fab in Ohio. The Trump administration took a 10% stake in Intel last year after the company lagged in 7- and 10-nanometer technologies.
Analysts note that Intel is the only U.S. supplier of advanced logic chips and could attract additional fabless customers if its next-generation 14A chip proves competitive.
The company recently completed a $23 billion equity offering and announced an expanded partnership with Oracle to deploy next-generation Xeon processors and rack-scale systems from Nvidia and AMD.