Shares of Intel plunged roughly 25 percent in premarket trading Friday after the American semiconductor giant issued a sharply disappointing sales and earnings forecast, raising fresh doubts about its turnaround and warning that a severe slump in the personal computer market could persist well into next year.
The California-based chipmaker said Thursday that it expects fourth-quarter revenue of between $15 billion and $16 billion, substantially below the $17 billion Wall Street analysts had anticipated.
Intel also forecast adjusted earnings of just 25 cents per share, compared with analysts’ expectations of 43 cents. The company’s projected gross profit margin of 38 percent was down sharply from the 43 percent reported for the third quarter.
The unexpectedly bleak outlook sent Intel shares tumbling more than 25 percent before Friday’s opening bell, threatening to wipe out more than $120 billion in market value. The selloff was particularly dramatic because Intel shares had more than doubled this year as investors bet on a revival of the company’s fortunes amid the artificial intelligence boom.
The disappointing forecast came despite surprisingly strong third-quarter results. Intel reported revenue of $16.5 billion, up 21 percent from a year earlier, and adjusted earnings of 52 cents per share, exceeding Wall Street expectations.
The company’s data center and artificial intelligence division was a particular bright spot, with revenue soaring 78 percent to $7.3 billion. But sales in its personal computer chip business declined five percent to $8.1 billion.
Intel executives warned that the weakness in the PC market is likely to get worse before it gets better.
Chief Financial Officer Dave Zinsner said the company expects global PC shipments to decline approximately 12 percent this year and another 10 percent in 2027. The slump is expected to continue through at least the first half of next year.
One of the biggest problems, according to Intel, is the artificial intelligence boom itself.
The rapid expansion of AI data centers has created enormous demand for memory chips, contributing to shortages and sharply higher prices. Intel says the higher component costs are squeezing PC manufacturers and contributing to falling computer shipments.
Meanwhile, the same AI boom has generated tremendous demand for Intel’s server processors. But Intel has struggled to produce enough chips to meet that demand because of manufacturing bottlenecks and shortages of critical components.
Intel Chief Executive Lip-Bu Tan acknowledged the company’s difficulties during Thursday’s earnings call.
“I’m disappointed that we were not able to meet strong customer demand in this quarter,” Tan said.
Compounding those problems was a deadly accident at Intel’s manufacturing facility in Israel earlier this month that forced the plant to suspend operations. The shutdown is expected to reduce revenue by approximately $300 million in the fourth quarter, with a similar impact anticipated early next year.
The problems represent a major setback for Intel’s efforts to regain its position as a global semiconductor leader.
Under Tan, who became chief executive in March 2025, Intel has undertaken a sweeping restructuring, reduced its workforce and attracted billions of dollars in new investment, including backing from Nvidia and the U.S. government.
The company is also spending heavily to expand its manufacturing capacity and develop advanced semiconductor technology. Intel expects capital spending of approximately $20 billion this year, with investment increasing significantly in 2027.
Zinsner warned that the heavy spending would likely prevent Intel from generating positive free cash flow next year.
Intel Predicts a PC Renaissance
Despite the gloomy near-term outlook, Intel executives remain convinced that artificial intelligence will eventually revive the personal computer industry.
“We do think that the PC is going to go through a renaissance,” Zinsner said during Thursday’s earnings call.
He predicted that AI applications will increasingly require computing power on individual devices, whether traditional personal computers or new machines designed specifically for AI applications.
Some industry analysts, however, have questioned whether the growth of cloud-based AI computing could reduce the need for consumers and businesses to purchase more powerful personal computers.
Jack Gold, an analyst at J. Gold Associates, recently told Computerworld that businesses are reconsidering their traditional three-to-four-year PC replacement cycles because much of their AI computing takes place in the cloud, reducing the need for upgraded hardware.
Cloud-based AI services can already handle many tasks traditionally performed on PCs, including writing, research, spreadsheets, communications and programming. Greater reliance on those services could allow businesses and consumers to extend the lives of existing computers or use less powerful devices.
That possibility presents a significant long-term challenge for Intel, whose fortunes have historically depended heavily on the regular replacement and upgrading of personal computers.
It also raises the possibility that the AI boom could simultaneously increase demand for Intel’s data center processors while reducing demand for the PC processors that have long been the foundation of its business.
Intel executives are betting that AI will ultimately produce a resurgence in demand for powerful personal computers. Friday’s sharp decline in Intel shares came as investors confronted the company’s forecast of another year of falling PC shipments, continued manufacturing constraints and sharply higher capital spending.