Intel’s AI rebound collided with a PC slump — and the stock paid the price
Intel’s AI rebound collided with a PC slump — and the stock paid the price
Intel entered Thursday’s earnings report with signs of a recovery: third-quarter revenue rose 21% year on year to $16.51 billion, narrowly beating expectations, while data-center and AI revenue jumped 78%. But its core client-computing business fell 5%, missing estimates and underscoring how uneven that recovery remains.
The problem, Intel argued, is not simply a lack of appetite for PCs. The AI buildout has intensified demand for memory and other components, pushing up system prices and squeezing already constrained IT budgets. “We see the PC slowdown continuing at least through the first half of next year,” finance chief David Zinsner said, even as the company pledged disciplined investment to expand supply.
By late August, the deterioration had become visible, according to Zinsner. “We really attribute it to memory prices,” he said. Intel projected fourth-quarter revenue of $15 billion to $16 billion, versus roughly $17 billion expected on Wall Street, and forecast gross margin would fall to 37% from 43% in the third quarter.
That guidance overwhelmed the stronger headline results. Shares fell more than 20% in extended trading, then tumbled about 28% to 29% on Friday as the sell-off spread through chipmakers and pulled the Nasdaq lower. The plunge knocked an estimated $12 billion from the value of the U.S. government’s Intel stake, though the investment remained profitable for the year after the stock’s earlier surge.
Intel’s executives cast the weakness as a near-term supply-and-pricing shock rather than a verdict on demand for computing. Investors were less forgiving: the company is spending heavily, expects no positive cash flow, and still lacks major external customers for its advanced foundry chips. The market’s message was blunt — an AI boom can lift one part of Intel’s business while starving another of the components it needs.
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