Intel (INTC) stock dropped 3.62% to $92.07 at market close before plunging 16.82% to $76.58 in after-hours trading, a steep sell-off that followed the company's third-quarter 2026 earnings report. The results showed stronger revenue and substantial growth across data center operations, but weakening PC demand and lower GAAP earnings applied pressure even as several other parts of the business posted improvements. Because after-hours trading occurs outside regular market sessions with fewer participants and lighter volume, price swings in extended hours can be sharper than during the trading day, and the level at which a stock opens the next regular session can differ from its extended-hours quote.

Stronger Revenue, Weaker GAAP Earnings

Intel reported third-quarter revenue of $16.5 billion, representing a 21% increase from $13.7 billion in the same period a year earlier. The company also generated $5.1 billion in cash from operations during the quarter, underscoring the financial performance behind the headline numbers. Despite the higher revenue and improved operating margins, the stock sold off sharply in extended trading after the release, with weakening PC demand and lower GAAP earnings weighing against the gains elsewhere in the portfolio.

GAAP net income attributable to Intel came in at $3.3 billion, down 18% from $4.1 billion in the previous year. Diluted GAAP earnings per share fell 33% to $0.60 from $0.90 over the same span. The non-GAAP picture was markedly different: non-GAAP net income increased 169% to $2.8 billion, while non-GAAP diluted earnings per share climbed 126% to $0.52. The gap between the two sets of figures reflects how each is constructed: GAAP results include every item required under standard accounting rules, while non-GAAP measures exclude items a company classifies as outside its core operations, which can point year-over-year comparisons in opposite directions.

The company's GAAP gross margin reached 43.0%, compared with 38.2% a year earlier, an improvement of 4.8 percentage points. Non-GAAP gross margin rose to 44.1% from 40.0%, and non-GAAP operating margin increased to 19.6%. Taken together, the metrics pointed to stronger operating performance during the quarter, although the year-over-year decline in GAAP earnings presented a more complicated picture.

Data Center and AI Revenue Jumps 78%

Intel's Data Center and AI division generated $7.3 billion in third-quarter revenue, marking a 78% increase from the previous year. The segment delivered one of the company's strongest growth contributions as demand for computing capacity continued to expand across data center operations, and it became a major contributor to Intel's overall revenue growth during the quarter. The result aligns with a broader pattern across the semiconductor industry, in which data center and AI infrastructure spending has become a principal driver of chip demand even as consumer PC sales soften.

Total Intel Products revenue reached $15.4 billion, a 22% increase compared with the third quarter of 2025. The Client Computing and Physical AI Group, by contrast, generated $8.1 billion, down 5% year over year. The divergence highlighted the growing importance of data center products to Intel's overall results as the company contended with weaker conditions in its traditional PC business.

Intel Foundry reported $6.7 billion in revenue, up 58% from the previous year. Revenue in the All Other category declined 30% to $0.7 billion, and intersegment eliminations reduced reported consolidated revenue. After these adjustments, Intel recorded total net revenue of $16.5 billion for the quarter.

PC Slowdown Adds Pressure to the Outlook

Intel identified weaker PC market conditions as a continuing challenge, with the slowdown expected to persist through at least the first half of 2027. At the same time, the company highlighted strong demand for its Xeon processors and the need to increase supply. Production capacity and product availability therefore remain important factors in Intel's ability to meet customer demand, and they double as key indicators for upcoming quarters: how quickly Intel can expand supply for data center products, and whether client demand stabilizes within the timeframe management described, will shape the year-over-year comparisons the company faces next.

Chief Executive Officer Lip-Bu Tan emphasized execution, manufacturing capacity and process technology as priorities for the business. Chief Financial Officer David Zinsner highlighted the quarter's revenue, gross margin and earnings performance against company guidance. Management's outlook pointed to continued PC weakness alongside opportunities across Intel's broader product portfolio.

Intel's latest results laid bare a clear divide between accelerating data center revenue and declining PC-related sales. Although total revenue increased 21% and Intel Foundry expanded 58%, GAAP net income and diluted earnings per share both declined year over year. The after-hours sell-off made clear that strong segment growth was not enough on its own to prevent a sharp negative reaction in the stock following the earnings announcement.

Source: Blockonomi