Intel’s data center sales jump 78%, but a weak forecast sends the shares tumbling

For one quarter, Intel looked like a company that had turned the corner. Revenue for July to September rose 21% to $16.5 billion, ahead of analysts’ forecasts. Adjusted earnings were 52 cents a share, against about 40 cents expected and 23 cents a year earlier. Chief financial officer David Zinsner said revenue, gross margin and earnings “exceeded guidance.”

Then Intel told investors what to expect next, and the shares fell more than 15% in after-hours trading.

The AI part of the business is booming

The growth came from data centers. Sales in Intel’s Data Center and AI division jumped 78% to $7.3 billion, which the company called its strongest data center growth in 15 years. AI systems still need ordinary processors to manage data and run software around the AI chips, and demand for Intel’s Xeon server processors has outrun supply. Chief executive Lip-Bu Tan said the “immediate priority is to unlock additional supply” to meet demand.

PCs went the other way. Revenue from the client computing division, which sells processors for laptops and desktops, fell 5% to $8.1 billion. Intel Foundry, the manufacturing business that mostly makes chips for Intel itself, grew 58% to $6.7 billion.

Billions of dollars. Q3 2025 calculated from reported growth rates.

• Data Center and AI
• Client computing (PCs)

Show the numbers

	Data Center and AI	Client computing (PCs)
Q3 2025	$4.1bn	$8.5bn
Q3 2026	$7.3bn	$8.1bn

Source: Intel third-quarter 2026 earnings release

Profitability improved too. Intel’s adjusted gross margin rose to 44.1% from 40% a year earlier. Net income under standard accounting rules was $3.3 billion, down 18%, while adjusted net income rose to $2.8 billion.

Why the forecast disappointed

Intel expects fourth-quarter revenue of $15 billion to $16 billion, a drop from the third quarter and well below the roughly $17 billion analysts expected. It forecast adjusted earnings of 25 cents a share, against about 43 cents expected, and said its adjusted gross margin would fall to about 38%.

Revenue, billions of dollars; Intel figure is the midpoint of its range

Show the numbers

	Q4 2026 revenue
Analysts expected	$17bn
Intel forecast	$15.5bn

Source: Intel; consensus via StockStory

• A PC slowdown: Zinsner said he sees it continuing “at least through the first half of next year.”
• Memory costs: The AI boom has driven up prices for memory chips, which makes laptops and desktops more expensive and squeezes PC makers. The same shortage that produced record profits at SK Hynix and Micron is now hurting the PC market Intel depends on.
• The Israel plant: A deadly explosion at Intel’s factory in Kiryat Gat this month will cost about $600 million in lost revenue over two quarters, Zinsner told Reuters.

High expectations, hard landing

The size of the drop reflects how far the stock had run. Intel shares were up about 150% this year before October, on hopes that its server chips and its manufacturing business would make it a winner of the AI boom. The shares closed at $92.03 on Thursday before the results.

The third quarter showed that the AI demand is real: data center sales nearly doubled. The forecast showed that Intel is still tied to the PC market, and that the AI boom has a cost for the rest of the chip industry. Memory makers are winning, and the companies that need memory are paying for it.