Intel (NASDAQ: INTC) shares plunged about 23% in Thursday’s after-hours trading after the chipmaker’s weaker-than-expected fourth-quarter outlook overshadowed its third-quarter earnings beat.
Intel expects fourth-quarter 2026 revenue of $15 billion to $16 billion, below analysts’ consensus estimate of $17.07 billion, according to LSEG data. Even the high end of that range falls short of expectations, while the $15.5 billion midpoint is approximately 9.2% below consensus. The company also forecast adjusted earnings of $0.25 per share, compared with analysts’ estimate of $0.43.
The company also forecast an adjusted gross margin of 38%, down from 44.1% in the third quarter. Intel said the outlook includes an estimated $300 million revenue reduction and a two-percentage-point gross margin impact from an October explosion at its manufacturing facility in Kiryat Gat, Israel.
Chief Financial Officer David Zinsner expects the disruption to reduce revenue by a similar amount in the first quarter of 2027, bringing the preliminary two-quarter impact to approximately $600 million.
The weaker forecast followed stronger third-quarter results. Intel reported revenue of $16.51 billion, up 21% year over year, while adjusted earnings of $0.52 per share exceeded analysts’ $0.40 estimate. Data Center and AI revenue surged 78% to $7.3 billion, while Client Computing and Physical AI revenue declined 5% to $8.1 billion.
Intel shares closed Thursday’s regular session at $92.07, down 3.62%, before falling to approximately $70.86 in extended trading. By the regular-session close, the stock had lost about 23.4% over the preceding 30 days but was up about 149.5% year to date. Neither return includes the subsequent after-hours decline.
Israel Factory Shutdown Disrupts Server-Chip Production
The Kiryat Gat factory, known as Fab 28, was shut down for approximately two weeks following the explosion. The October 14 blast killed two workers and seriously injured a third, according to The Times of Israel. Zinsner said Intel expected to begin ramping production by the end of the week.
Almost all of the estimated fourth-quarter revenue loss from the facility involves server processors manufactured using Intel’s 10-nanometer technology, management said.
Intel is still assessing which semiconductor wafers affected by the incident can be recovered and sold. Zinsner said the company’s initial revenue estimates could change as it determines the extent of the damage. Most wafer write-offs are expected to occur in the fourth quarter, limiting the anticipated gross margin impact in early 2027.
Despite the disruption, Intel expects Data Center and AI revenue to grow by a mid-teens percentage sequentially in the fourth quarter, supported by continued demand for server processors. The company also warned that manufacturing capacity and component shortages continue to restrict its ability to meet customer demand.
PC Market Weakness and Higher Spending Pressure Outlook
Intel’s fourth-quarter guidance also reflects weaker personal-computer demand as rising memory prices, component shortages, and constrained customer budgets affect purchases.
Zinsner warned that the slowdown could persist through at least the first half of 2027. Intel expects Client Computing and Physical AI revenue to fall more than 20% sequentially in the fourth quarter as PC manufacturers reduce inventories to match softer demand.
Management projected that industrywide PC unit shipments would decline approximately 12% in 2026 and a further 10% in 2027. Intel also cited lower production volumes relative to fixed manufacturing costs and changes in product mix as factors affecting its fourth-quarter gross margin outlook.
The company expects gross capital expenditures of approximately $20 billion in 2026, with spending projected to increase significantly in 2027 as it expands manufacturing capacity.
During Thursday’s earnings call, Zinsner said positive free cash flow was unlikely in 2027 because of the company’s planned investments in manufacturing capacity and technology.
