Intel plunges 18% as weak Q1 guidance overshadows Q4 beat
Supply shortages and AI data center headwinds loom over breakeven EPS outlook
Intel shares tumbled 17.8% to $44.65 on Friday, wiping out about $31 billion in market value, after the chipmaker issued a disappointing first-quarter forecast that eclipsed a better-than-expected fourth-quarter performance. The guidance shortfall reignited concerns about manufacturing execution and the company's ability to capitalize on surging AI infrastructure demand.
For the fourth quarter of 2025, Intel posted revenue of $13.7 billion, down 4% year-over-year, with non-GAAP earnings per share of $0.15—both exceeding analyst estimates. But the company's outlook for the first quarter of 2026 revealed deeper challenges. Intel expects revenue between $11.7 billion and $12.7 billion and non-GAAP EPS of approximately $0.00, falling short of consensus expectations.
Chief Financial Officer David Zinsner acknowledged that supply constraints are the primary near-term headwind. "We expect our available supply to be at its lowest level in Q1 before improving in Q2 and beyond," Zinsner said in the company's press release. He added that Intel is "working aggressively to grow supply to meet strong customer demand" for its first products built on the Intel 18A process node.
The weak guidance triggered a wave of analyst downgrades and negative commentary. Bernstein analysts noted that Intel appeared to have "woefully misjudged" the server cycle and was "caught massively off guard" on capacity, according to their comments aggregated by multiple outlets. Morningstar highlighted that the Q1 data center revenue guidance disappointed investors, especially given expectations that server CPUs should thrive amid the AI buildout. They characterized the stock as overvalued given near-term execution risks.
Even as the Data Center and AI segment grew 9% year-over-year in Q4 2025, the outlook suggested Intel is struggling to keep pace with the "hyper-accelerated demand cycles of the AI era," analysts said. Bernstein and others cited capacity limitations as the key constraint preventing Intel from fully capturing the AI-driven demand surge. Analysts also pointed out that financial benefits from Intel's advanced 18A and 14A process nodes remain further off than previously hoped, keeping execution risks elevated.
The steep sell-off has trimmed some of the stock's recent gains. Before Friday's drop, Intel shares had more than doubled over the past year on optimism about a turnaround. The selloff also tests the market's willingness to value the company on potential rather than near-term results. The analyst consensus remains cautious, with a majority of ratings at Hold and an average target price of $42.46, below the pre-guidance levels, according to market data.
Chief Executive Lip-Bu Tan sought to reassure investors about the company's long-term positioning. "Our conviction in the essential role of CPUs in the AI era continues to grow," Tan said, adding that Intel aims to "fully capitalize on the vast opportunity AI presents across all of our businesses." Zinsner echoed that sentiment, noting that "Demand fundamentals across our core markets remain healthy" and underscoring the importance of the x86 ecosystem in AI deployments.
For now, the market is demanding tangible proof of execution. The guidance shortfall underscores the gap between Intel's ambitious turnaround narrative and the operational realities of meeting AI-era demand amid supply shortages. With supply expected to improve later in 2026, investors will be watching closely for evidence that Intel can scale its AI-focused products and convert technical advancements into consistent financial results.