Key Highlights

● Intel fell 3.62% to $92.07 in regular trading on about 98.67 million shares.

● Third-quarter adjusted EPS of $0.52 beat consensus of roughly $0.40.

● Fourth-quarter Revenue guidance of $15.0 billion to $16.0 billion fell well short of consensus.

● Data Center and AI revenue rose 78% to $7.32 billion, but Supply limits cap shipments.

What made Intel (NASDAQ:INTC) one of the most heavily traded US stocks on Thursday was its third-quarter Earnings report after the close, and the after-hours reaction was far bigger than the day's regular-session move. In regular trading, Intel fell 3.62% to $92.07 on Volume of 98.67 million shares, roughly normal, as Alphabet (NASDAQ:GOOGL)'s results set off a broad tech selloff. Traded value came to about $9.08 billion, tenth among US stocks.

After the release the stock dropped sharply. One report showed a fall of more than 21% at first, with shares later down about 15% at $77.96, the lowest since mid-April. Another market wrap showed a 23% decline by about 8 p.m. ET. The cause was not the quarter just ended, which beat expectations on earnings. It was a fourth-quarter outlook that came in well below what analysts expected. Intel is a member of the S&P 500 and Nasdaq-100, with a Market Value of about $486.69 billion at the close.

A beat for the quarter, a big miss for the outlook

Intel reported third-quarter revenue of $16.51 billion, up about 21% from a year earlier and close to analyst estimates. Depending on the tally, consensus ranged from about $16.47 billion to $16.56 billion. Adjusted earnings were $0.52 per share, against consensus of roughly $0.40, and more than double the year-earlier figure. GAAP earnings were $0.60 per share. The adjusted gross Margin was 44.1%, up about 4 points from a year ago. Operating Cash Flow roughly doubled to $5.08 billion, and Capital spending was $4.22 billion.

The guidance is what moved the stock. Intel forecast fourth-quarter revenue of $15.0 billion to $16.0 billion, a step down from the third quarter and well short of consensus near $17.1 billion. It guided to adjusted EPS of $0.25, against expectations of about $0.43 to $0.44, and to an adjusted gross margin of 38%, down about 6 points in one quarter.

According to a summary of media coverage, Intel's finance chief said the PC slowdown could last at least through the first half of 2027. Media reports said management also said supply limits, including shortages of substrates and memory, are still capping shipments of Xeon server processors. CFO David Zinsner said: "We will not fully catch up. We will still be behind in the fourth quarter." Another report said Intel also said an explosion at a factory in Israel, which shut the plant for about two weeks, will cost about $600 million in lost revenue over two quarters.

Two businesses moving in opposite directions

The quarter showed Intel's two main product businesses heading in different directions. Data Center and AI revenue rose 78% from a year earlier to $7.32 billion, and segment operating profit roughly tripled to about $3.04 billion. Zinsner described it as the strongest data center growth in 15 years, and CEO Lip-Bu Tan said CPU Demand remains strong and that releasing more Xeon supply is the top priority. The PC business, now called Client Computing and Physical AI, fell 5% to $8.10 billion, and its operating profit dropped to $2.29 billion from $2.69 billion.

PCs are still Intel's largest single business, so a slowdown there carries a lot of weight. Combine that with a server Business that cannot ship everything customers want, and the fourth-quarter guide makes sense, even if investors did not expect it. The mix also matters for margins. A quarter with fewer high-value server chips and weaker PC volumes spreads Intel's large fixed Manufacturing costs over less revenue, which helps explain why the gross margin guide falls so much faster than sales.

The foundry bet

The other major piece of Intel's story is its contract manufacturing arm. Intel Foundry revenue rose 58% to $6.7 billion, and its operating loss narrowed by $348 million to $2.1 billion, according to media reports. The same coverage said output on the company's 18A manufacturing process was running about 25% above target.

One report listed other recent developments: design tools released for the next-generation 14A process, work with ASML (NASDAQ:ASML) and other equipment suppliers on capacity, a multiyear deal to offer upcoming Xeon chips in Oracle (NYSE:ORCL)'s cloud, a software collaboration with Advanced Micro Devices (NASDAQ:AMD), and a planned Acquisition of Quantum Computing software firm Classiq. Investors will be watching whether outside customers commit to Intel's leading-edge processes at scale. That is the central question for the foundry strategy, and capital spending, which media reports put above $20 billion for 2026, is expected to rise in 2027.

Valuation and the run-up

Intel lost money over the past four quarters on a GAAP basis, so it has no trailing P/E. Market data shows trailing EPS of minus $2.12. On forward numbers the stock was not cheap going into the report. Before the release, media coverage cited consensus 2027 EPS of about $2.14, which puts Thursday's $92.07 close at roughly 43 times next year's earnings. That compares with trailing multiples of about 27 for Nvidia (NASDAQ:NVDA) and about 145 for AMD on market data.

A weaker fourth-quarter guide is likely to bring forward estimates down, which would push that multiple higher at a given price. The stock was up nearly 150% for the year going into the report, though it had also fallen about 20% over the previous month. The market value of about $487 billion reflects high expectations for both the data center recovery and the foundry business.

The bull case and the bear case

Bulls point to clear evidence that the data center business is recovering: 78% growth, operating profit that has roughly tripled, and demand that management says is still bigger than supply. Gross margins have improved from a year ago, cash generation is stronger, and the foundry's losses are shrinking while 18A production beats targets. Seen this way, the fourth-quarter shortfall is mainly a supply problem and a PC cycle problem, not a sign of weak demand. Before the report, one tally showed a Moderate Buy consensus, with 5 Buy and 10 Hold ratings and an average target of about $114.

Bears argue that a guide this far below consensus, with a 6-point margin drop, shows how fragile Intel's earnings still are. PCs are slowing, and management expects that to last into mid-2027. Supply problems that Intel does not fully control are holding back its fastest-growing business. Foundry still loses about $2 billion a quarter while capital spending rises. Even before the report, the stock's valuation already assumed a lot of the turnaround would succeed.

What to watch next

The first test is Friday's regular session. It will show whether the after-hours decline holds, and analysts are likely to revise ratings and targets in the coming days. After that, investors will watch whether Intel can ease the substrate and memory shortages limiting Xeon shipments, what PC makers and other chip companies say about client demand, how foundry customer commitments and 18A volumes develop, and the size of the 2027 capital budget. The fourth-quarter report early next year will show whether the 38% margin guide marks the bottom.