Intel Shares Plunge on Bleak Earnings Forecast

A disappointing outlook for the coming quarter sent Intel's stock into a tailspin on Friday, abruptly halting its recent recovery rally. While the chipmaker's fourth-quarter results were solid, investor alarm was triggered by guidance for the first quarter of 2026, revealing a paradoxical struggle: immense demand for AI-related components exists, but the company cannot meet it due to severe supply constraints.

The primary driver behind the weak forecast is a significant bottleneck in manufacturing capacity. Chief Financial Officer David Zinsner stated that while these constraints affect the entire semiconductor industry, Intel is being hit particularly hard. The company is currently unable to fully satisfy robust demand for server chips—precisely the components that are essential for artificial intelligence data centers.

Zinsner indicated that availability will reach its lowest point in Q1 2026. An improvement in the supply situation is not anticipated until the second quarter. This timing is especially unfavorable, preventing Intel from capitalizing fully on the current wave of AI investment.

Guidance Shock Wipes Out Gains

The market's focus shifted almost entirely to the disappointing forecast, despite Intel surpassing profit expectations for Q4, even as it reported a revenue decline. The stock plummeted 15.48% to $45.88 in a single session, erasing a substantial portion of its gains from recent weeks.

Should investors sell immediately? Or is it worth buying Intel?

For the ongoing first quarter of 2026, management projected adjusted earnings per share of $0.00—effectively break-even. The revenue forecast of $11.7 to $12.7 billion represents an approximate 11% drop from the prior quarter and fell well below Wall Street's expectations.

A Divergent Performance Across Divisions

An examination of Intel's business segments reveals a stark internal contrast. The Data Center and AI unit grew by 9% to $4.7 billion, confirming the underlying strength of demand in that sector. Conversely, the Client Computing group (PC chips) contracted by 7% to $8.2 billion, reflecting persistent weakness in the consumer market.

In response to the production shortfalls, Intel announced plans to increase its investments in manufacturing facilities during 2026. The focus now turns to whether management can deliver on its promise to meaningfully ease supply constraints starting in Q2 and subsequently capture the pent-up AI demand it is currently missing.