Intel shares fell 16% in extended trading after the chipmaker gave a fourth-quarter forecast below analyst estimates and pointed to a continuing PC slowdown. Third-quarter revenue met expectations and adjusted earnings beat them, but the outlook fell short.
Intel shares fell 16% in extended trading on Thursday after the chipmaker issued a weak fourth-quarter forecast. The company cited continued softness in the global PC market.
The forecast broke a run of strong results. The Financial Times reported that Intel's outlook ended a stretch of strong earnings this year that had built confidence in its turnaround.
Third-quarter results beat on earnings, outlook falls short
Intel posted adjusted earnings per share of 52 cents against 40 cents expected, on revenue of $16.51 billion versus $16.5 billion expected. Revenue climbed 21% from $13.7 billion a year earlier.
For the current quarter, Intel expects adjusted earnings per share of 25 cents on revenue between $15 billion and $16 billion. Analysts were expecting revenue of $17.1 billion and EPS of 43 cents, according to LSEG.
The company also warned that gross margins would fall to 37 per cent this quarter, citing higher costs from an industry-wide shortage of memory chips.
PC weakness offsets data center growth
Revenue in the client computing and physical AI group fell 5% to $8.1 billion, missing estimates. Data center and AI revenue, however, jumped 78% to $7.3 billion.
Finance chief David Zinsner said in the earnings release, according to CNBC: "We see the PC slowdown continuing at least through the first half of next year".
An explosion at an Intel fab in Israel earlier this month also shaped the outlook. Zinsner told Reuters the incident will cost about $600 million in lost revenue over two quarters.
Shares had surged before the selloff
Intel's stock is up about 150% so far this year, though it is down roughly 23% in October as concerns have emerged about the size of the artificial intelligence buildout. The Financial Times reported that shares have fallen more than 20 per cent over the past month on concerns about inflation, the data centre boom and AI borrowing.
Sources: CNBC, Financial Times
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