Key Takeaways
- Intel beat third-quarter estimates with $16.5 billion in revenue and $0.52 adjusted EPS, but shares tumbled after hours on a weak fourth-quarter guide.
- Fourth-quarter revenue guidance of $15 billion to $16 billion trails the $17.1 billion consensus, and adjusted EPS of $0.25 trails the $0.43 estimate.
- CFO David Zinsner sees the PC slowdown “continuing at least through the first half of next year,” and Intel expects negative free cash flow in 2027.
- Intel trades at 47x forward earnings after a 134% gain this year, so the late January report needs to show supply recovering.
“Despite near-term headwinds across the PC industry, demand for our CPUs remains robust.”
Intel CEO Lip-Bu Tan opened Thursday’s release with that line. Investors focused on the first half of it.
Intel (INTC) beat third-quarter estimates after the close, then guided fourth-quarter revenue to $15 billion to $16 billion. Analysts were looking for $17.1 billion, so the midpoint misses by about $1.6 billion. Shares tumbled after hours and dragged other chip stocks lower.
The stock had already fallen 3.6% to $92 in regular trading. It’s still up about 134% this year, and that gain set a high bar.
A beat with a weak handoff
The quarter itself was strong. Revenue rose 21% to $16.5 billion, and adjusted EPS of $0.52 beat the $0.40 estimate. Adjusted gross margin came in at 44.1%, about two points above guidance, and operating cash flow reached $5.1 billion.
The outlook is where things broke:
- Revenue of $15 billion to $16 billion versus $17.1 billion expected
- Adjusted EPS of $0.25 versus a $0.43 estimate
- Gross margin of about 38%
Two supply problems drive the gap. An explosion that killed two workers forced an extended shutdown at Intel’s Israel fab, and an industry shortage of advanced packaging substrates is limiting shipments. PC demand is weak too, with Intel expecting 2026 PC units to fall about 12%.
Where does that leave the quarterly revenue trend?
The $15.5 billion midpoint would snap two straight quarters of sequential growth.
Data center keeps hope alive
CFO David Zinsner called it “our strongest data center revenue growth in 15 years.” Tan said the priority is to meet “extraordinary demand for our Xeon family.”
That demand is real. Intel expects data center and AI revenue to grow by a mid-teens percentage sequentially in the fourth quarter, while client revenue falls more than 20%.
The process roadmap also moved forward. Clearwater Forest, Intel’s first server chip on 18A, is now shipping for revenue, and Diamond Rapids is on track to ramp in 2027. Separately, Intel agreed to buy quantum software firm Classiq for about $2.3 billion.
Still, the profit gap with the foundry leader is wide…
Taiwan Semiconductor (2330) grew third-quarter revenue 41.2% to $46.7 billion at a 66.4% gross margin. Intel’s guide points to 38% next quarter, so it has a long way to go.
TIKR tracks 50 analysts on Intel. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Intel, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Intel’s Analyst Ratings
The cash burn is the problem
Intel lifted 2026 capex to about $20 billion. Management also expects free cash flow to turn negative in 2027, which it has labeled an “investment year.”
Zinsner sees the PC slowdown “continuing at least through the first half of next year.” So the client business, still Intel’s largest, offers little near-term relief.
Wall Street’s free cash flow estimates already reflect that…
Consensus doesn’t see free cash flow turning positive until 2028.
Meanwhile, the stock trades at 47x forward earnings. The average price target sits at $118, about 28% above Thursday’s close, but those targets came before this guide.
My take: The data center demand looks durable, and 18A shipping for revenue is real progress. But I think 47x forward earnings is too much for a company guiding to a margin drop and two years of cash burn. Supply fixes should help in 2027, so I’d wait for a cleaner entry.
The next checkpoint is Intel’s fourth-quarter report in late January. It should show whether the Israel fab is back online and whether substrate supply is improving.
So what is Intel stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
