Intel just delivered one of its strongest quarters in years, and its stock still fell off a cliff. The chipmaker reported third-quarter revenue of $16.5 billion on Thursday, October 29, up 21% from a year earlier, powered by a 78% surge in its data center and AI business. But a weaker-than-expected forecast for the holiday quarter sent shares down more than 20% in extended trading.
Here is a breakdown of the numbers and what they say about the state of the chip industry, based on CNBC, Intel’s earnings release and DCD.
The quarter by the numbers
According to CNBC, citing LSEG analyst estimates:
- Revenue: $16.51 billion, versus $16.5 billion expected, up from $13.7 billion a year earlier.
- Adjusted earnings per share: 52 cents, versus 40 cents expected.
- Data Center and AI revenue: $7.3 billion, up 78% year over year.
- Client computing revenue: $8.1 billion, down 5% year over year and below estimates.
So the business that sells chips for servers and AI is booming, while the business that sells chips for PCs is shrinking.
Why the stock fell anyway
Investors focus on what comes next, and Intel’s guidance disappointed. For the fourth quarter, the company forecast revenue of $15 billion to $16 billion and adjusted earnings of 25 cents per share. Analysts had expected about $17.1 billion in revenue and 43 cents per share, CNBC reported.
Finance chief David Zinsner pointed to the PC market. “We see the PC slowdown continuing at least through the first half of next year,” he said. CNBC cited Counterpoint Research data showing global PC shipments fell 4% in the second quarter from a year earlier, as soaring costs for memory and other components weighed on the market.
A costly accident in Israel
The outlook also reflects an explosion earlier this month at an Intel fab in Israel that killed two workers and seriously injured a third. Zinsner said the incident will cost the company about $600 million in lost revenue over two quarters. CEO Lip-Bu Tan called it an “unfortunate and tragic accident” that caused an “extended shutdown” at the plant, affecting shipments of 10-nanometer chips.
The AI angle: CPUs are back in demand
Intel’s data center surge is tied to a shift in how AI is used. CNBC explains that while chatbots and large models rely heavily on GPUs from Nvidia and AMD, agentic AI applications lean on traditional CPUs to orchestrate tasks and data in the cloud. That has made Intel’s server processors newly important.
Tan said he was “disappointed that we were not able to meet strong customer demand in this quarter,” and DCD reported Intel said demand still exceeded supply.
Foundry still searching for customers
Intel is now in high-volume production of its most advanced 18A chips at its new Arizona fab, according to CNBC, but it does not yet have major external customers for its foundry business. Tan said on the call, “We’re going to have a couple of customers ready to announce the next two quarters.”
Context: a wild year for the stock
Before the report, Intel shares had climbed roughly 150% this year, CNBC said, though they were already down about 23% in October amid growing concern about the scale of the AI buildout. That backdrop helps explain why the market reacted so sharply to a soft forecast.
What to watch next
AMD reports next week and Nvidia in mid-November, which will give a broader read on AI chip demand. For everyday buyers, the bigger signal may be the PC market: higher memory costs and slower sales could shape laptop and desktop prices into next year.
The takeaway
Intel’s quarter tells two stories at once. AI is driving huge demand for its server chips, but the PC business that built the company is under pressure. Until the foundry lands big customers and PCs recover, investors are likely to keep reacting to every forecast.
Image: Intel Tualatin die shot (Pentium 3) – high resolution – stitched by Martijn Boer via Wikimedia Commons, Public Domain Mark 1.0
