Intel Q4 Beats But Weak Guidance Sends Shares Down 10%
Chipmaker's Q1 outlook misses estimates as supply shortages peak. Stock erases recent rally in after-hours trading.
Intel delivered the numbers. The guidance crushed the stock.
Shares plunged more than 10% in after-hours trading Thursday after the chipmaker issued a first-quarter outlook well below Wall Street expectations. The drop wiped out most of the recent rally that had pushed Intel to two-year highs heading into the report.
The fourth-quarter results actually beat estimates. Adjusted earnings of $0.15 per share topped the $0.08 consensus, while revenue of $13.7 billion edged past the $13.6 billion forecast. Gross margins held steady. Operating profit improved.
None of that mattered once management started talking about Q1.
The Guidance Gap
Intel expects Q1 revenue between $11.7 billion and $12.7 billion. The Street was modeling $12.55 billion—above the midpoint of that range. Adjusted earnings are expected at breakeven, versus analyst estimates of $0.05 per share.
CFO David Zinsner blamed supply chain disruptions that have constrained Intel's ability to meet demand for certain products. The shortages will likely peak in Q1, with improvement expected in the second quarter.
That's cold comfort for investors who bought the turnaround story at two-year highs.
The Actual Q4 Numbers
The headline beat masked some ugly details.
Intel reported a net loss of $600 million, or 12 cents per diluted share—wider than the $100 million loss a year ago. Total revenue of $13.7 billion was down 4.1% year-over-year. Gross profit dropped 11.5%.
The Client Computing Group—the PC chip business—generated $7.9 billion in revenue, roughly flat versus the prior year. Data Center and AI revenue came in at $3.4 billion, down 2%.
These aren't turnaround numbers. They're treading water.
The Foundry Question
Intel's real bet is on contract manufacturing.
The 18A process—the most advanced chip technology ever built domestically—has moved from development to production. Earlier this month, CEO Lip-Bu Tan demonstrated working wafers to President Trump, showing Intel can fabricate sub-2-nanometer chips at scale.
But winning external customers takes years. TSMC has spent decades building relationships with Apple, AMD, Nvidia, and others. Intel's pitch is essentially: trust us, we can do this too.
The Taiwan Semiconductor Manufacturing Company doesn't have supply shortages affecting guidance.
Analyst Reaction
Wall Street was already split before the report.
HSBC and Seaport upgraded Intel ahead of earnings, citing the foundry opportunity and 18A progress. KeyBanc maintained a cautious stance, noting the gap between Intel's manufacturing ambitions and current financial reality.
After the guidance miss, the bears have ammunition. Q4 earnings beat, but the GAAP loss widened. Margins remain pressured. And the Q1 outlook suggests operational headwinds aren't improving as fast as the stock price suggested.
Where This Leaves Intel
At Thursday's close of $50.10, Intel traded at roughly 25 times forward earnings—a premium that assumed accelerating progress. The after-hours selloff to the mid-$40s reprices that optimism.
The 18A technology appears real. The CES demonstrations and White House meeting weren't theater. Intel has genuinely closed the manufacturing gap with TSMC.
But closing the gap and monetizing it are different things. Until foundry revenue shows up in meaningful scale, Intel remains a legacy chipmaker with declining market share, compressed margins, and a capital-intensive turnaround plan that requires patience.
Thursday's guidance reset reminds investors that patience has a cost.