Intel shares drop 17% after it forecasts weaker chip sales

In short: Intel shares fell nearly 17% after the company told investors to expect lower revenue and slimmer profit margins this quarter.

What happened

Intel said revenue for the three months to September was $16.5bn, which matched expectations. But the company forecast $15bn to $16bn in revenue for the current quarter. Wall Street was expecting about $17bn.

Intel also warned that its gross margin, a basic measure of how much money it keeps after direct costs, would drop to 37% this quarter. The company said costs are rising because of an industry-wide shortage of memory chips, which are parts many computers need to work (like having enough shelves to store things quickly).

CEO Lip-Bu Tan said Intel is “moving with urgency” to unlock supply to support chip sales. CFO David Zinsner added that a slowdown in the PC market will likely continue into the first half of next year.

Intel’s core product business, which sells chips for servers and personal computers, brought in $15.4bn in revenue. Its manufacturing arm, called the foundry, reported $6.7bn. A foundry is like a factory-for-hire that makes chips, including for other companies.

Intel reported net income of $3.3bn, and adjusted net income of $2.8bn. It spent $4bn on new facilities and equipment this quarter and has pledged $20bn in 2026.

Why it matters

Chips are the key parts inside computers, phones, and the data centers that run many AI services. Intel has been trying to rebuild investor confidence after years of struggles and heavy spending on factories. A weaker sales outlook suggests that comeback could be harder, especially if PC demand stays soft and parts shortages keep costs high.

Source: Financial Times