Intel drops 20% on weak Q4 forecast despite profit growth

Intel shares fell 20% on Thursday after the chipmaker issued a fourth-quarter forecast well below Wall Street expectations, overshadowing its better-than-expected third-quarter profit and strong data center processor demand. Intel reported adjusted earnings per share of $0.52 for the third quarter, beating analyst estimates of $0.40. Revenue rose 21% year-over-year to $16.5 billion, slightly above the consensus of $16.48 billion. The company expects fourth-quarter revenue between $15 billion and $16 billion, below the $17.08 billion analysts anticipated, with adjusted EPS forecast at $0.25 versus the $0.44 consensus. The weak outlook comes amid mixed trends across Intel's business units. Client Computing and Physical AI Group revenue fell 5% year-over-year to $8.1 billion, while Data Center and AI segment revenue surged 78% to $7.3 billion, marking the strongest data center growth in 15 years. Intel expects adjusted gross margin to decline to 38% in the fourth quarter from 44.1% in Q3.