From Decrypt · By Jose Antonio Lanz
In brief
Intel shares plunged nearly 30% to $65.76 on Friday, wiping out more than $146 billion in market value as investors reacted to a disappointing fourth-quarter forecast.
Intel expects Q4 revenue of $15 billion to $16 billion, well below Wall Street's $17.07 billion estimate, while adjusted earnings per share are forecast at $0.25 versus expectations of $0.43.
Demand for AI server processors is booming, but manufacturing and packaging shortages are limiting production. Meanwhile, Intel expects the PC market to contract through 2027 and warned it probably won't generate positive free cash flow next year.
Intel shares plunged nearly 30% to $65.76 on Friday after the chipmaker issued a fourth-quarter forecast that fell well short of Wall Street expectations, overshadowing an otherwise strong earnings report.
The selloff wiped out more than $146 billion in market value, and translated into the worst single-day decline in more than 50 years.
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The problem is that Intel finds itself in an unusual position: demand for its processors is booming because of the AI infrastructure buildout, but the company cannot manufacture enough chips to capitalize on it. At the same time, its traditional PC business is struggling, and the factories needed to support its long-term recovery are consuming enormous amounts of money.
Intel's third-quarter numbers were actually quite good. Revenue climbed 21% year over year to $16.5 billion, while adjusted earnings per share reached $0.52, beating the company's guidance of $0.38 and Wall Street's $0.40 estimate. It was the company's eighth consecutive quarter of exceeding its financial expectations, according to CFO Dave Zinsner.
The strongest performer was Intel's Data Center and AI division, which generated $7.3 billion in revenue, up 78% year over year and nearly 80% compared with the same period last year. The division's operating profit reached $3 billion, representing 42% of its revenue.
But investors were looking at what comes next. Intel expects fourth-quarter revenue between $15 billion and $16 billion, meaning its midpoint guidance of $15.5 billion is roughly $1.6 billion below the $17.07 billion analysts had anticipated. Adjusted earnings per share are expected to fall to $0.25, compared with Wall Street's $0.43 estimate.
BitcoinBTC · USD$76,946−5.48%Oct 23Oct 25Oct 27Oct 29Oct 30$81.8k$80.1k$78.4k$76.7k24h HighHigh$79,56324h LowLow$76,338VolVol$2.3B→Buy Bitcoin with USDTPowered by JupiterPrice data by CoinGeckoCoinGeckoMore Bitcoin news and projections →Gross margins, which measure how much revenue remains after accounting for the direct costs of making products, are also expected to deteriorate. Intel forecast a non-GAAP gross margin of 38% for Q4, down from 44.1% in the third quarter.