TLDR
- Intel stock collapsed 13% after hours following weaker-than-expected Q1 revenue and earnings guidance
- The chipmaker can’t produce enough AI server chips to meet customer demand due to manufacturing issues
- First-quarter revenue outlook of $11.7-12.7 billion missed Wall Street’s $12.51 billion estimate
- CEO Tan confirmed 18A manufacturing yields are improving but still fall short of company targets
- Intel reported a $600 million quarterly net loss despite beating Q4 revenue expectations
Intel delivered a rare earnings beat Thursday but still watched its stock sink 13% in after-hours trading. The culprit wasn’t the past quarter’s performance. It was what lies ahead.
The company reported fourth-quarter adjusted earnings of 15 cents per share on revenue of $13.7 billion. Both numbers topped analyst forecasts. Yet investors immediately zeroed in on the troubling guidance.
Intel projected first-quarter revenue between $11.7 billion and $12.7 billion. Wall Street wanted $12.51 billion. The company also forecasts breakeven adjusted earnings per share compared to analyst expectations of 5 cents.
CFO David Zinsner blamed insufficient supply for the weak outlook. He told CNBC the company lacks the production capacity to handle seasonal demand. Supply should increase in the second quarter, he added.
CEO Lip-Bu Tan discussed manufacturing challenges on the earnings call. Production yields haven’t reached acceptable levels. “Our yields are in line with our internal plans,” Tan said. “They are still below what I want them to be.”
Demand Outpaces Production Capacity
Intel grapples with a problem most struggling companies would envy. It can’t manufacture chips fast enough to satisfy orders. The shortage hits hardest with server processors for AI data centers.
The company maxes out its factory capacity but still falls short. Intel leaves money on the table as profitable orders go unfilled. “In the short term, I’m disappointed that we are not able to fully meet the demand in our markets,” Tan told analysts.
The bottleneck centers on Intel’s 18A production process. The company started delivering Panther Lake PC chips made with this technology. But quality yields remain problematic.
Reports suggest only a fraction of 18A chips pass quality checks. Poor yields hurt margins. Tan said yields get better monthly but haven’t hit targets.
Data Center and AI sales hit $4.7 billion for the quarter, up 9% from last year. Client Computing Group sales dropped 7% to $8.2 billion as laptop demand softened.
Intel posted a net loss of $600 million, or 12 cents per diluted share. That compares to a $100 million loss in the same quarter last year.
Next-Generation Technology Plans
Zinsner said Intel holds off on major 14A manufacturing investments while waiting for a significant customer commitment. Two potential clients are reviewing the technology now.
The company expects decisions on 14A adoption by the second half of this year. Investors can track capital expenditure spikes to identify new customer wins, Zinsner noted.
Intel’s foundry operations brought in $4.5 billion during the quarter. That figure includes chips made for internal use. Tan said the company works aggressively to expand 18A production.
The chipmaker closed its $5 billion stock sale to Nvidia in the quarter. SoftBank invested $2 billion and the U.S. government also bought a stake last year.
Zinsner told Reuters that major cloud companies got blindsided by AI demand. They scrambled to replace aging chips with network performance problems. Intel faces delays when shifting production between chip types.
Global memory chip shortages pushed prices higher and made PCs more expensive. Zinsner expects the tightest supply in Q1 with improvements coming in Q2.
Intel stock rallied 147% over the past year on hopes for its foundry business and new technologies. Shares climbed 84% in 2025 alone, crushing the semiconductor index’s 42% advance.
Zinsner told CNBC that Intel’s capital expenditure will likely hold steady instead of declining as previously anticipated.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
