Intel stock falls about 28% after a weak PC outlook and rising memory prices

On Thursday, October 29, Intel published its results for the third quarter. The numbers looked good. The surprise came in the forecast.

According to Intel's own report, here is the picture:

• Third-quarter revenue: $16.5 billion, up 21% from the same quarter a year earlier.
• Data center and AI revenue: $7.3 billion, up 78%.
• Cash from operations: $5.1 billion in the quarter.
• Fourth-quarter forecast: revenue of $15.0 billion to $16.0 billion.

Intel's CFO, David Zinsner, said revenue, gross margin and earnings per share all beat the company's own guidance. He also said it was the strongest data center revenue growth in 15 years.

The catch: the fourth-quarter forecast of $15 billion to $16 billion is lower than the $16.5 billion Intel just earned. TechCrunch reports that analysts had been looking for about $17 billion.

A stock price is mostly a bet on the future. Investors do not pay for last quarter's sales. They pay for what they think a company will earn next.

When a company says the next few months will be weaker than expected, investors rush to sell. That is how a good quarter can sit next to a bad day on the stock market.

TechCrunch adds two more details from the forecast:

• Profit margin: Intel warned its gross margin would fall to 37% from 43%. Gross margin is the share of each sale left after paying to make the product.
• Cash flow: Intel is spending so heavily that it expects no positive cash flow. Cash flow is the money coming in minus the money going out.

Here is the reason, and it has little to do with Intel's skills. It has to do with memory.

Memory chips are the parts that let a computer hold many things at once. AI data centers need enormous amounts of them. TechCrunch reports that the AI industry is gobbling up memory and other components, which pushes up the price of PCs.

Intel's CEO, Lip-Bu Tan, said so on the earnings call. "Our customers began signaling a PC slowdown based on the memory prices and availability," he said, according to TechCrunch. "Year-to-date system endpoint prices have increased significantly, placing additional pressure on already limited IT budgets."

In real life Imagine a company that planned to replace 500 office laptops this year. The new ones now cost much more because of memory prices, so the boss says "let's wait until spring." Multiply that by thousands of companies, and a chipmaker feels it.

Intel's CFO said the company sees the PC slowdown continuing at least through the first half of next year. In the earnings release, Tan added that demand for Intel's CPUs, the main processor chips in computers, "remains robust" despite near-term headwinds across the PC industry.

Intel's report shows two kinds of profit, and they point in different directions. Non-GAAP earnings leave out some one-time items, so many investors treat them as a cleaner view of the business.

• Non-GAAP earnings per share: $0.52, up 126% from $0.23 a year earlier.
• GAAP earnings per share: $0.60, down 33% from $0.90 a year earlier.
• Net income: $3.3 billion on the GAAP basis, down 18%.
• Gross margin: 43.0% on the GAAP basis, up from 38.2% a year earlier.

For the fourth quarter, Intel forecasts earnings per share of $0.10 on the GAAP basis and $0.25 on the non-GAAP basis. Both are well below the third quarter's non-GAAP figure.

The big picture: the business got healthier over the year. The worry is only about the next few months.

Yes. Intel's data center and AI business brought in $7.3 billion in the third quarter, up 78%. A data center is a big building full of servers, the computers that run apps, websites and AI.

Intel says its immediate priority is to unlock more supply of its Xeon server chips to meet what Tan called "extraordinary demand."

Why it matters: this is the other half of the story. AI is the reason Intel's server chips are in demand, and it is also the reason memory is scarce and PCs cost more. One trend is pushing both numbers in opposite directions.

TechCrunch notes that Intel is limited here too, until it can add more factory capacity and win more outside customers for its factories. One of its new fabs, the plants where chips are made, in Arizona is already running. The next one is not expected to be online until 2028. Intel competes there with the giant Taiwan Semiconductor Manufacturing Co.

Intel is not just any stock. TechCrunch reports that the Trump administration had the US government buy a 10% stake in Intel more than a year ago. Nvidia also took a big stake in 2025.

Citing CNBC, TechCrunch says Friday's drop cut the value of the government's holding by about $12 billion. Nvidia's own stock fell a little on Friday too. TechCrunch adds that much of the tech industry, especially chipmakers, was caught in the selloff.

By the numbers: even after this drop, Intel's stock is still up more than 70% for the year, according to TechCrunch. That means the government and Nvidia are still in profit on their stakes so far. The stock has fallen a lot from the very high prices it reached over the summer.

Intel's report lists many projects that point past this quarter. A few of them:

• More money: Intel completed a $23 billion public stock offering and says it kept an investment-grade credit rating.
• Quantum computing: it plans to acquire Classiq, a software company, to build a full-stack quantum computing platform.
• Cloud deal: it announced a multiyear collaboration with Oracle to bring more Xeon-based computing to Oracle's cloud.
• New chips: it showed a next-generation Xeon server chip code-named Diamond Rapids and an Intel GPU D-series for AI inference. Inference means running an AI model to get an answer.
• Factory tools: it released the Intel 14A 0.9 process design kit and announced collaborations with ASML, Lam Research and Applied Materials.

What's next: investors will now watch whether Intel can add supply for server chips before the PC slowdown eases. The company says it is "moving with urgency."

• Buying a PC: Intel says system prices have risen a lot this year. If your computer still works, waiting may save money, but nobody can promise when prices will ease.
• Using AI: the same AI boom that powers the tools you use is soaking up the parts that go into laptops and desktops.
• Investing: one day does not tell you where a company is headed. Intel's own results beat its guidance. The forecast is what scared the market.
• Business buyers: Intel expects tight budgets for PC upgrades through the first half of 2027.