Intel’s AI boom could not stop a brutal PC-driven selloff
Intel’s AI boom could not stop a brutal PC-driven selloff
Intel’s third-quarter report initially offered the outline of a comeback. Revenue rose 21% year on year to $16.5 billion, helped by demand for chips used in data centers running agent-style AI services. But the same AI buildout that lifted one side of Intel’s business also tightened memory supplies for PC makers, pushing up component prices and curbing computer shipments.
The divide was stark in the numbers released Thursday. Intel reported adjusted earnings of 52 cents a share, above the 40 cents analysts expected, while revenue narrowly topped forecasts at $16.51 billion. Data-center and AI revenue jumped 78% to $7.3 billion. Yet client computing and physical AI revenue fell 5% to $8.1 billion, missing estimates as the global PC market weakened.
By late August, Intel finance chief David Zinsner said, the company saw “some real weakening of the market,” which it attributed to memory prices. Intel now expects fourth-quarter revenue of $15 billion to $16 billion, versus Wall Street expectations near $17 billion, and forecasts a gross margin of 37%, down from 43% in the third quarter.
Zinsner’s longer view was no more reassuring for PC investors: “We see the PC slowdown continuing at least through the first half of next year.” He said Intel would keep investments disciplined even as it worked to expand supply.
The forecast also reflected disruption from an explosion at an Israeli fab, which Intel said would cost roughly $600 million in lost revenue across two quarters after an extended shutdown affected shipments of 10-nanometer chips.
Investors focused on the near-term damage. Intel shares fell more than 20% in after-hours trading, despite chief executive Lip-Bu Tan’s insistence that long-term demand for CPUs and the company’s broader computing platforms remains robust. The market’s verdict was harsher: AI may be powering Intel’s future, but it is also squeezing the PC business it still depends on.
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