Intel shares fall more than 20% in extended trading after weak outlook

Intel stock fell more than 20% in extended trading after the chipmaker issued a fourth-quarter outlook that was well below Wall Street expectations. For investors following the Intel stock PC slowdown story, the key distinction is that the company slightly exceeded estimates for the quarter just ended, while its forecast pointed to weaker results ahead, according to CNBC.

Intel reported adjusted third-quarter earnings of 52 cents a share on revenue of $16.51 billion. Analysts polled by LSEG had expected 40 cents a share and $16.5 billion in revenue, CNBC reported. Intel said total revenue rose 21% from $13.7 billion a year earlier.

Why did Intel shares fall after its earnings report?

The market reaction followed Intel’s fourth-quarter guidance. The company forecast adjusted earnings of 25 cents a share and revenue between $15 billion and $16 billion. LSEG’s cited consensus was 43 cents a share and $17.1 billion in revenue.

At the midpoint of Intel’s revenue range, the company projected $15.5 billion, about $1.6 billion, or roughly 9%, below the analyst consensus. Its 25-cent adjusted earnings outlook was 18 cents below the 43-cent expectation.

Intel finance chief David Zinsner said in the earnings release that the company expected the PC slowdown to persist at least through the first half of the following year. CNBC, citing Counterpoint Research, said global PC shipments fell 4% year over year in the second quarter amid higher memory and other component costs.

Intel’s business results were mixed

Intel’s client computing and physical AI group generated $8.1 billion in revenue, down 5% from a year earlier and below estimates, CNBC reported. Its data center and AI revenue rose 78% to $7.3 billion.

Management also disclosed an operational disruption in Israel. Zinsner said an explosion at an Intel fab was expected to reduce revenue by about $600 million over two quarters. Chief Executive Lip-Bu Tan said the incident led to an extended shutdown at the plant and affected shipments of 10-nanometer chips.

Tan said Intel was disappointed that it had not met strong customer demand during the quarter. Zinsner said the company would continue disciplined investment in capacity and working capital to increase supply and support future growth.

The results leave investors with two opposing signals: Intel’s reported third-quarter earnings and revenue narrowly topped expectations, while management’s forecast set a materially lower bar for the next quarter.

This story draws on original reporting from CNBC.