Intel’s data centre and artificial intelligence business grew quickly in the third quarter, while its PC-chip operation continued to shrink. The chipmaker reported third-quarter revenue of $16.5 billion, up 21% from $13.7 billion a year earlier, as data centre and AI revenue jumped 78% to $7.3 billion. Revenue at its client computing and physical AI group fell 5% to $8.1 billion.
That contrast fed into a fourth-quarter forecast that came in well below market expectations. Intel expects adjusted earnings per share of 25 cents on revenue of $15 billion to $16 billion for the current quarter. Analysts had expected $17.1 billion in revenue and earnings per share of 43 cents.
Its shares fell more than 20% in extended trading on Thursday after the forecast. The decline followed a rise of over 100% in Intel’s stock so far in 2026, measured at Thursday’s close before the earnings report.
Intel cited continued softness in the global PC market, where shipments fell 4% in the second quarter from a year earlier. It said soft PC-chip sales and supply constraints in its data centre operations had weakened the outlook.
The supply problem was compounded earlier this month by an explosion at Intel’s fab in Israel, which killed two workers and seriously injured a third. The incident will cost Intel about $600 million in lost revenue over two quarters.
Lip-Bu Tan, Intel’s chief executive, said the explosion had caused an “extended shutdown” at the plant and disrupted shipments of 10-nanometer chips. He said he was “disappointed that we were not able to meet strong customer demand in this quarter”.
David Zinsner, Intel’s finance chief, said: “We see the PC slowdown continuing at least through the first half of next year”.
Intel expects the PC market to contract 10% in 2027 after an expected 12% drop in 2026, and says the downturn will last at least through the opening six months of 2027. Memory prices have risen sharply, and Tan said they would be “a very severe issue to all of us” in 2027.
The company is also pressing on with its manufacturing plans in Arizona. It is in high-volume production of its most advanced 18A chip at a new fab there, and expects its next Arizona fab to start operating by the end of 2028.
Intel completed a $23 billion equity offering in August.
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