SANTA CLARA, Calif. Intel Corp.’s shares dropped sharply on Thursday after the company released its fourth-quarter earnings and a first-quarter 2026 forecast that fell below market expectations, despite continued strong global demand for semiconductors, particularly advanced processors used in artificial intelligence and cloud computing. Analysts and company officials cited production constraints rather than weak market demand as the primary factor behind the stock decline.
KEY POINT
- Intel’s stock fell following weaker-than-expected revenue guidance for the first quarter of 2026, even though fourth-quarter results slightly exceeded estimates.
- Supply chain bottlenecks and limited manufacturing capacity are constraining the company’s ability to fulfill growing global demand.
- Demand for AI and data-center processors remains robust, highlighting long-term growth potential despite near-term operational challenges.
Intel reported fourth-quarter 2025 revenue of $13.7 billion, down four percent from the same period a year earlier but modestly above analyst forecasts. Non-GAAP earnings per share were $0.15, surpassing consensus expectations.
However, the company’s guidance for the first quarter projecting revenue between $11.7 billion and $12.7 billion with near break-even profit disappointed investors, prompting a decline of over 10 percent in after-hours trading.
The semiconductor industry is experiencing high demand for advanced chips, driven by AI workloads, cloud infrastructure expansion, and enterprise server upgrades.
While market appetite remains strong, many manufacturers, including Intel, face challenges in scaling production quickly enough to meet these needs.
Intel’s new process nodes, including its Intel 18A and forthcoming Panther Lake CPUs, are considered technologically competitive but have experienced yield and ramp-up difficulties, which limit near-term output.
Intel’s leadership under CEO Lip-Bu Tan has focused on operational restructuring and next-generation manufacturing to regain competitiveness against rivals such as AMD and NVIDIA.
Although these initiatives aim to strengthen the company’s long-term position, supply limitations have emerged as a central concern for investors tracking quarterly performance.
“Intel’s earnings reflect operational execution challenges rather than a drop in chip demand,” said Harish Patel, a semiconductor strategist at TechEconomics Research. “The market is reacting to the mismatch between strong orders and the company’s ability to deliver.”
Anna Liu, senior analyst at Global Compute Insights, said global investment trends support continued demand growth.
“Cloud providers and data-center operators continue to expand hardware deployments, particularly for AI,” she said. “The underlying demand environment is strong, but supply bottlenecks are limiting revenue growth in the near term.”
Economists monitoring capital expenditure in the tech sector noted that firms continue to plan for large-scale procurement of AI-ready processors and high-performance computing systems, underscoring that shortfalls are logistical rather than demand-driven.
| Metric | Q4 2025 | Q4 2024 | Change |
|---|---|---|---|
| Revenue ($B) | 13.7 | 14.3 | Down 4% |
| Non-GAAP EPS | 0.15 | 0.13 | Up 15% |
| Q1 2026 Revenue Guidance ($B) | 11.7–12.7 | n/a | Below estimates |
Intel CFO David Zinsner said supply limitations were the main factor influencing guidance. “Inventory levels are expected to be at their lowest early this year, but demand fundamentals remain solid,” he said on the earnings call.
An executive at a major cloud provider, speaking on condition of anonymity, confirmed increased orders for AI optimized processors.
“We are seeing continued demand, but delivery times are stretched due to manufacturing capacity,” the executive said.
Intel plans to expand manufacturing capacity and improve yields on its advanced nodes over the next several quarters.
Investments in both US and international production facilities are expected to alleviate near-term supply constraints.
Analysts note that while these improvements are planned, the exact timing and financial impact remain uncertain.
Global demand for semiconductors is expected to continue growing, fueled by AI adoption, edge computing, and enterprise IT expansion.
Supply limitations at major manufacturers may create short-term volatility in stock prices, even as long-term growth fundamentals remain strong.
Intel’s stock decline after its latest earnings report reflects investor concern about near-term operational constraints rather than a slowdown in chip demand.
The company’s ability to expand production and ramp up next-generation processors will be key to translating sustained global demand into consistent revenue growth