Intel shares plunged nearly 30% to $65.76 on Friday, wiping out more than $146 billion in market value and marking the company's worst single-day decline in more than 50 years, after the chipmaker issued a fourth-quarter forecast that fell well short of Wall Street expectations and overshadowed an otherwise strong earnings report.

Intel guided for fourth-quarter revenue of $15 billion to $16 billion, well below Wall Street's $17.07 billion estimate, and projected adjusted earnings per share of $0.25 versus expectations of $0.43. The midpoint of that revenue guidance, $15.5 billion, sits roughly $1.6 billion below what analysts had anticipated.

The selloff left Intel in an unusual position. Demand for its processors — particularly AI server chips — is booming amid the AI infrastructure buildout, but manufacturing and packaging shortages are limiting production and preventing the company from fully capitalizing on that demand. At the same time, its traditional PC business is struggling, and the factories needed to support its long-term recovery are consuming enormous amounts of money.

Strong third quarter

Intel's third-quarter numbers were solid. Revenue climbed 21% year over year to $16.5 billion, while adjusted earnings per share reached $0.52, beating both the company's guidance of $0.38 and Wall Street's $0.40 estimate. It was the company's eighth consecutive quarter of exceeding its financial expectations, according to CFO Dave Zinsner.

The strongest performer was Intel's Data Center and AI division, which generated $7.3 billion in revenue, up 78% year over year. The division's operating profit reached $3 billion, representing 42% of its revenue.

Guidance disappoints

Investors, however, were looking at what comes next. Adjusted earnings per share are expected to fall to $0.25 in the fourth quarter, compared with Wall Street's $0.43 estimate. Gross margins — which measure how much revenue remains after accounting for the direct costs of making products — are also expected to deteriorate. Intel forecast a non-GAAP gross margin of 38% for Q4, down from 44.1% in the third quarter. Set against the quarter just reported, the guidance implies a sequential step-down on both headline measures: revenue at the midpoint would land about $1 billion below the $16.5 billion Intel booked in Q3, and the $0.25 adjusted EPS guide is less than half of the $0.52 just delivered.

Three problems explain much of that deterioration: weaker PC demand, manufacturing constraints affecting server processors, and an accident at one of Intel's factories in Israel. Intel also expects the PC market to contract through 2027.

An 'investment year' ahead

Zinsner described 2027 as an investment year and warned investors not to expect positive free cash flow — the money a company has left after paying operating expenses and investments in equipment and infrastructure. Intel expects to sacrifice cash generation in the short term to finance its manufacturing expansion.

"Probably not a dynamic where we are going to have positive free cash flow next year," Zinsner said during the earnings call. He added that Intel expects a return on invested capital of at least 20% — a measure of the profit generated relative to the capital put to work — on its manufacturing node investments, but acknowledged that several major projects will require substantial spending at the same time.

That spending is part of Intel's broader attempt to rebuild its manufacturing business and compete with Taiwan Semiconductor Manufacturing Company, or TSMC, the world's leading contract chipmaker. Intel wants to manufacture chips not only for its own products but also for outside customers, a business model known as a foundry.

High-profile partners

The turnaround has attracted major partners. In September 2025, Nvidia invested $5 billion in Intel and agreed to collaborate on custom processors for PCs and data centers. The partnership gave Intel a financial boost while connecting its processors to Nvidia's AI ecosystem.

Intel's next-generation 18A process, the manufacturing technology behind chips such as Panther Lake, is central to the company's attempt to regain its technological edge.

More recently, a preliminary agreement with Apple to manufacture some of its chips helped send Intel shares above $130 in May. The potential deal could give Intel a significant new customer as Apple looks to diversify its manufacturing supply chain.

Those developments helped fuel optimism around Intel's recovery, but Friday's selloff shows how much still needs to go right. The company has strong demand in its data center business, yet it must increase manufacturing output, navigate a shrinking PC market and finance an expensive expansion before investors can expect consistent cash generation. Near-term signposts include fourth-quarter gross margin against the 38% forecast and progress on the 18A manufacturing technology behind Panther Lake.