A move of this size in a major index constituent is likely to weigh on Nasdaq futures early in the Asian session and spill into semiconductor sentiment, particularly names exposed to PC demand. The PC warning has read-across to Asian hardware suppliers, memory makers and contract manufacturers, which could see pressure in regional trade. The data centre and AI beat may limit the damage for AI-focused chip names, keeping the sell-off more targeted at the PC supply chain. The regular US session will show whether the after-hours move holds.
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ps. you’ll never guess who’s a big holder:
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Intel won the quarter and lost the outlook, and after-hours traders made clear which one they cared about.
Summary:
- Intel shares fell around 20% in after-hours trading
- Q4 guidance: adjusted EPS of $0.25 against $0.43 expected, revenue of $15 billion to $16 billion against about $17 billion, and a 38% gross margin against 42.8%
- Intel expects the PC market to decline into the second half of 2027
- Q3 adjusted EPS of $0.52 beat; revenue of about $16.5 billion was in line, and margins topped forecasts
- Datacenter and AI and Foundry beat estimates; Client Computing and free cash flow missed
- The editor sees the drop as excessive and expects buyers to emerge (opinion, not investment advice)
Intel shares fell around 15% in after-hours trading after the chipmaker issued fourth-quarter guidance well below expectations. The outlook overshadowed a third-quarter result that beat on profit and margins.
The outlook did the damage. Intel guided fourth-quarter adjusted earnings per share to $0.25, against a consensus of $0.43, and expects revenue of $15 billion to $16 billion. At the midpoint, that is roughly $1.5 billion short of the near $17 billion analysts had modelled and about $1 billion below the third quarter. The guidance for an adjusted gross margin of 38% was arguably the most damaging figure. It sits almost five points below forecasts and marks a steep step down from the 44.1% just reported.
Intel also said it expects the PC market to decline into the second half of 2027. That is significant for Client Computing, its largest division, which sells processors for personal computers. The unit already missed estimates in the third quarter, with revenue of about $8.1 billion against expectations of roughly $8.8 billion.
The quarter itself was stronger. Adjusted earnings per share of $0.52 beat the $0.41 estimate, while revenue of about $16.5 billion was in line. The adjusted operating margin reached 19.6%, three points above forecasts. Datacenter and AI revenue of around $7.3 billion and Intel Foundry revenue of about $6.7 billion both topped estimates. Adjusted free cash flow of about $1.6 billion, however, was roughly half the forecast, although only two analysts had published an estimate.
The company has not yet detailed what is driving the margin step down. Comments on the earnings call about costs, product mix and the timing of any recovery will be key to whether the selling extends into the regular session.
In my view, a fall of this size looks excessive for a company that has just beaten on profit and shown growth in its data centre and foundry businesses. The guidance is poor, but I suspect a drop of around 15% will draw buyers at these lower levels. That is my opinion only and not investment advice. The case against it is clear: if the PC downturn runs into late 2027 and margins stay near 38%, the weaker earnings outlook could justify a lower valuation for longer.
This article was written by Eamonn Sheridan at investinglive.com.