Intel stock falls 5% as forecast disappoints, chipmaker warns of margin pressure

Intel Corp. shares fell as much as 5% in after-hours trading on Thursday after the chipmaker issued a first-quarter outlook that missed Wall Street expectations, tempering optimism around its long-awaited turnaround.

The company forecast first-quarter revenue of about $12.2 billion at the midpoint of its guidance, below the $12.6 billion average estimate compiled by Bloomberg.

Intel also said it expects to break even on an earnings-per-share basis, compared with analysts’ projections of $0.08.

The cautious outlook contrasted with a better-than-feared fourth quarter, in which Intel delivered earnings and revenue above expectations.

The results underscore the tension facing the US chipmaker as it seeks to balance near-term cost pressures with longer-term bets on artificial intelligence and advanced manufacturing.

AI demand lifts results, but costs loom large

Intel reported fourth-quarter earnings of $0.15 a share, edging past both last year’s $0.13 and the $0.09 expected by analysts.

Revenue fell 4% from a year earlier to $13.7 billion but exceeded forecasts of $13.4 billion.

Chief Executive Officer Lip-Bu Tan pointed to rising demand for central processing units, or CPUs, used in AI workloads, particularly in data centres.

“Our conviction in the essential role of CPUs in the AI era continues to grow,” Tan said in a statement, adding that the company aims to sharpen execution and reinvigorate engineering excellence as it pursues AI opportunities across its businesses.

Intel’s adjusted gross margin came in at 37.9%, down from 42.1% a year ago but ahead of estimates.

Still, margins remain under pressure as the company ramps spending on its next-generation 18A manufacturing process and future nodes, investments seen as critical to restoring its competitiveness as a contract chipmaker.

Turnaround hopes face near-term headwinds

Intel remains the only large-scale US producer of leading-edge chips and has backing from the federal government, positioning it as a strategic counterweight to Asian manufacturing rivals.

Yet its product business continues to face intense competition from Advanced Micro Devices and Arm-based chip designs, while Nvidia dominates AI accelerators.

Wall Street sentiment toward Intel has improved in recent weeks, driven by stronger demand for traditional CPUs in data centers and enthusiasm around its upcoming Panther Lake chips designed for AI-powered PCs.

Firms including HSBC and KeyBanc raised their ratings, helping push Intel shares up nearly 12% this month and to their highest level in four years earlier this week.

That momentum now faces fresh scrutiny. Intel warned that rising costs for memory and storage components used alongside its processors could dampen demand for servers and PCs built around Intel chips, weighing on profitability.

Chief Financial Officer David Zinsner said the company exceeded fourth-quarter expectations even as it “navigated industry-wide supply shortages,” highlighting execution improvements but also the fragile backdrop for growth as Intel pushes deeper into the AI era.

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