Intel (INTC) stock fell as much as 11% after the bell Thursday as its first quarter financial outlook fell short of Wall Street’s expectations.
The chipmaker said it expects first quarter revenue of $12.2 billion, at the midpoint of its range and below the $12.6 billion projected by Wall Street analysts tracked by Bloomberg. Intel guided for earnings per share of $0 for the period, short of the estimated $0.08.
Intel’s corporate vice president of investor relations John Pitzer told Yahoo Finance the softer-than-anticipated guidance was due to supply shortages.
“Our biggest sort of challenge in the near term is we can’t meet all the demand that our customers are giving us,” Pitzer said in an interview. “I think our supply constraints are most pronounced in Q1.”
“We’re working aggressively to get more output out of our fabs,” he added. Fabs are Intel’s semiconductor manufacturing plants.
Meanwhile, Intel reported better-than-expected fourth quarter earnings and revenue, nodding to rising AI demand for its chips, called CPUs (central processing units), in its press release.
Intel’s earnings per share of $0.15 for the period were slightly above the previous year’s $0.13 and ahead of the $0.09 projected, per Bloomberg data. The chipmaker’s fourth quarter revenue of $13.7 billion marked a 4% decline from the year-ago period but was higher than the $13.4 billion expected.
Pitzer said Intel’s businesses tied to AI grew “double digits” in the fourth quarter, both sequentially and from the previous year.
The company — the only large-scale, leading-edge US chip manufacturer backed by the federal government and Nvidia (NVDA) — has faced mounting competition from AMD (AMD) and Arm (ARM) in its product business, adding to pressure on Intel as its manufacturing division strives to recover from years of setbacks.
One challenge Intel faces in the near term is the hefty cost of developing 18A and upcoming manufacturing process nodes, which are set to weigh on gross margins. Although Intel’s adjusted gross margin of 37.9% in the fourth quarter marked a decline from 42.1% last year, it was above the 36.5% estimated.
Another concern is that rising costs for memory and storage components used alongside Intel’s CPUs in data center servers and PCs could weigh on demand for systems built with Intel processors and hurt the chipmaker’s bottom line.
CFO David Zinsner said in a call with analysts Thursday that the issue “could limit our revenue opportunity” in 2026.
Intel’s fourth quarter report comes amid burgeoning Wall Street optimism over the company’s long-awaited turnaround. Rising demand for Intel’s traditional computing chips from data centers and the launch of Intel’s Panther Lake chips for AI PCs prompted multiple investing firms, including HSBC and KeyBanc, to raise their ratings on Intel stock in the last few weeks. The moves boosted shares this month, with the stock rising nearly 12% to hit its highest level in four years on Wednesday alone.
Analysts have also been more optimistic about Intel’s manufacturing business and its ability to attract much-needed external customers, as the debut of Panther Lake — built with its latest 18A manufacturing process — added to newfound optimism for the segment. In his note upgrading the stock, KeyBanc analyst John Vinh speculated that Intel has secured Apple (AAPL) as a customer to use its newer 18A-P process to make Mac chips and that the companies are in talks to utilize Intel’s upcoming 14A process for low-end smartphone chips.
Intel has not officially commented on its potential deal with Apple, but Pitzer told Yahoo Finance that Intel is “actively engaged” with customers for 14A.
“I think our opportunity to actually win a customer opens up sometime in the second half of this year into the first half of 2027,” he said, and CEO Lip-Bu Tan confirmed that timeline in the call with analysts.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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