Intel (INTC) stock fell as much as 17% Friday after its first quarter financial outlook fell short of Wall Street’s expectations and after executives said the company struggled to keep up with demand for chips used in AI data centers.
The chipmaker said it expects first quarter revenue of $12.2 billion, at the midpoint of its range and below the $12.6 billion projected by Wall Street analysts tracked by Bloomberg. Intel guided for earnings per share of $0 for the period, short of the estimated $0.08.
Intel corporate vice president of investor relations John Pitzer told Yahoo Finance the softer-than-anticipated guidance was due to supply shortages.
“Our biggest sort of challenge in the near term is we can’t meet all the demand that our customers are giving us,” Pitzer said in an interview. “I think our supply constraints are most pronounced in Q1.”
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“We’re working aggressively to get more output out of our fabs,” he added. Fabs are Intel’s semiconductor manufacturing plants.
Meanwhile, Intel reported better-than-expected fourth quarter earnings and revenue and nodded to rising AI demand for its chips, called CPUs (central processing units), in its press release.
Intel’s earnings per share of $0.15 for the period were slightly above the previous year’s $0.13 and ahead of the $0.09 projected, per Bloomberg data. The chipmaker’s fourth quarter revenue of $13.7 billion marked a 4% decline from the year-ago period but was higher than the $13.4 billion expected.
Pitzer said Intel’s businesses tied to AI grew “double digits” in the fourth quarter, both sequentially and from the previous year.
The company — the only large-scale, leading-edge US chip manufacturer backed by the federal government and Nvidia (NVDA) — has faced mounting competition from AMD (AMD) and Arm (ARM) in its product business, adding to pressure on Intel as its manufacturing division strives to recover from years of setbacks.
One challenge Intel faces in the near term is the hefty cost of developing 18A and upcoming manufacturing process nodes, which are set to weigh on gross margins. Although Intel’s adjusted gross margin of 37.9% in the fourth quarter marked a decline from 42.1% last year, it was above the 36.5% estimated.
Another concern is that rising costs for memory and storage components used alongside Intel’s CPUs in data center servers and PCs could weigh on demand for systems built with Intel processors and hurt the chipmaker’s bottom line.
CFO David Zinsner said in a call with analysts Thursday that the issue “could limit our revenue opportunity” in 2026.
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