Intel Corp. (INTC) delivered the kind of earnings report that sounds good until you read the fine print. The chipmaker beat fourth-quarter profit expectations on Thursday, posting adjusted earnings of 15 cents per share against a consensus of just eight cents. Revenue came in at $13.67 billion, topping the $13.37 billion estimate. But then came the guidance, and investors headed for the exits.
For the current quarter, Intel forecast revenue between $11.7 billion and $12.7 billion, well below Wall Street's $12.49 billion expectation. Worse still, the company guided for breakeven adjusted earnings when analysts had penciled in a modest profit. Revenue fell 4% year over year in Q4, with gains in Data Center and AI unable to fully offset weakness in Client Computing. The stock dropped 15.70% to $45.78 on Friday.
Supply Squeeze Caps Growth Potential
The problem, according to analysts, isn't demand. It's supply. Needham analyst N. Quinn Bolton maintained a Hold rating and noted that tight chip supply continues to limit shipment volumes. The constraints are most severe on Intel's 10nm and 7nm process nodes, where much of the company's production capacity sits. Bolton said Intel guided adjusted gross margin to 34.5% at the midpoint, citing an unfavorable product mix weighted toward Panther Lake, which pressures corporate margins.
He expects the supply crunch to bottom out in the first quarter before gradually improving. Intel plans to prioritize wafer supply for servers, which means Client Computing will see steeper revenue declines than Data Center and AI in the near term.
Cautious Optimism from Some Corners
Not everyone is bearish. Benchmark analyst Cody Acree reiterated a Buy rating and raised his price target to $57 from $50, calling the selloff an overreaction following a strong recent run. He described Intel as navigating a major transition, pointing to the 18A process milestone and the early launch of the Core Ultra Series 3 as evidence of improving execution. Acree tagged 2026 as a "prove-it year" for manufacturing efficiency, while acknowledging ongoing margin pressure from 18A production ramps and component pricing headwinds.
JPMorgan Sees Long Road Ahead
JPMorgan analyst Harlan Sur maintained an Underweight rating but lifted his price target to $35 from $30. He said the disappointing guidance reflects persistent internal wafer capacity limits, particularly on Intel 10 and 7. Gross margin guidance fell short due to lower revenue and an unfavorable mix, as both Lunar Lake and Panther Lake remain margin dilutive.
Sur noted that Intel is streamlining its server roadmap and accelerating product timing to slow market share losses to Advanced Micro Devices, Inc. (AMD), while AI inference workloads continue supporting demand for traditional server CPUs. His team expects PC shipments to decline roughly 9% next year, but Data Center and AI demand should drive low- to mid-single-digit overall revenue growth for Intel this year.
The takeaway? Intel's turnaround is happening, but it's messy, margin-pressured, and supply-constrained. Growth is there if you squint, but investors wanted to see it now, not later.
