Intel (NASDAQ:INTC) stock dropped about 23% in after-hours trading on Thursday, Oct. 29, after the company released its third-quarter numbers. Shares that closed the regular session at $92.07 traded around $71 by the end of the evening.
The quarter itself was strong. Revenue grew 21% year over year to $16.5 billion. And non-GAAP (adjusted) earnings per share of $0.52 came in far above the $0.38 management had guided for in July, more than doubling from $0.23 a year before.
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The outlook was a different story. Intel forecast fourth-quarter revenue at $15.0 billion to $16.0 billion and adjusted earnings per share at $0.25 — under half what it just earned.
Is the drop a chance to buy Intel stock at a lower price? I think the answer has less to do with Intel’s server business, which is booming, than with how long a slump in PC sales lasts.
Image source: Intel.
Data center demand keeps rising
Showing the strength on the server side, revenue in Intel’s data center and AI segment leapt 78% year over year to $7.3 billion in the third quarter. Management said it was the segment’s fastest revenue growth in 15 years.
And it keeps picking up. In the first quarter of 2026, segment revenue rose 22%. By the second quarter, growth had hit 59%.
Intel still couldn’t make enough chips.
“Despite our progress to increase capacity, demand for [data center and AI] products continues to meaningfully exceed available supply,” CFO David Zinsner said in his prepared remarks for the earnings call.
Intel expects segment revenue to grow by a mid-teens percentage in the fourth quarter over the third. Zinsner also said Intel expects the industry to stay short of supply through 2027 and into 2028.
Why did the stock fall?
The problem is on the PC side. Revenue in Intel’s client computing and physical AI group, which sells chips for PCs, fell 5% year over year to $8.1 billion. It dropped 9% from the second quarter.
Management blamed higher memory prices, which have made new PCs pricier, and tight IT budgets. Unfortunately, the next quarter might be even worse. Intel expects revenue in the PC segment to drop over 20% from the third quarter as PC makers draw down their inventory. It now expects PC unit sales industrywide to shrink around 12% in 2026 and about 10% in 2027. Intel’s outlook also reflects an accident earlier this month that shut its Fab 28 plant in Israel for an extended period. The company expects that to lower fourth-quarter revenue by around $300 million and gross margin by about 2 percentage points.
