Intel's PC Slump Clouds Strong AI Growth in Q3 Earnings

Intel reported third-quarter revenue of $16.5 billion, up 21% year over year, but issued a weak fourth-quarter outlook of $15.5 billion, far below analyst estimates of $17.3 billion, causing shares to fall up to 21% after hours. The company cited weak PC processor demand and higher memory chip prices, forecasting PC unit sales to decline 12% in 2026 and another 10% in 2027. Intel's data center segment grew 78% year over year on server CPU and AI demand, but supply constraints may limit near-term upside. Morningstar lowered its fair value estimate for Intel to $85 from $105, citing reduced PC revenue projections. A mid-October manufacturing accident in Israel will also hit fourth-quarter revenue by $300 million and gross margin by 200 basis points.