Intel Shares Plunge After Strong Earnings Meet Weak Outlook

On January 22, 2026, Intel found itself in the harsh glare of the financial spotlight. Despite reporting fourth-quarter results that comfortably beat Wall Street expectations, the chip giant’s shares tumbled sharply in after-hours trading, as investors digested a much softer outlook for the first quarter of 2026. The reaction was swift and brutal: Intel stock dropped as much as 13.4% after the market closed, erasing a portion of the gains that had seen the company’s shares soar 147% over the past year, according to Investing.com and CNBC.

The numbers themselves painted a picture of a company at a crossroads. For the fourth quarter of 2025, Intel reported adjusted earnings per share of 15 cents, nearly doubling analyst forecasts of 8 cents. Revenue reached $13.7 billion, comfortably above the $13.4 billion expected by analysts surveyed by LSEG and FactSet. As noted by The Motley Fool and Investors.com, these results marked a healthy beat on both the top and bottom lines, suggesting robust demand for Intel’s products—especially in its Data Center and AI segment, which posted a 9% year-over-year increase to $4.7 billion in revenue.

But any celebrations were short-lived. The real shock came from Intel’s guidance for the first quarter of 2026. Management projected revenue between $11.7 billion and $12.7 billion and breakeven adjusted earnings per share—significantly below the consensus estimates of $12.51 billion in sales and 5 cents earnings per share. This forecast, as CNBC reported, sent a chill through investors who had grown accustomed to the company’s recent momentum.

So what’s behind the sudden pessimism? According to Intel’s Chief Financial Officer David Zinsner, the answer lies in supply constraints, not a lack of demand. “We expect our available supply to be at its lowest level in Q1 before improving in Q2 and beyond,” Zinsner explained in a press release and during interviews with CNBC. He pointed out that the company simply doesn’t have enough chips on hand to meet the usual seasonal demand, but expects the situation to improve as the year progresses.

Intel’s CEO, Lip-Bu Tan, echoed this sentiment on a call with analysts, emphasizing that the company is working to improve production efficiency—what the industry calls yield—to boost output. “Our yields are in line with our internal plans,” Tan said, “but they are still below what I want them to be.” He added that the introduction of Intel’s first products on the 18A process technology, described as the most advanced process developed and manufactured in the United States, marks an important milestone for the company. “We’re working aggressively to grow supply to meet strong customer demand,” Tan asserted, according to Investing.com.

The 18A manufacturing technology is a particular point of pride for Intel, as it competes directly with Taiwan Semiconductor Manufacturing Company’s (TSMC) 2nm technology. Tan stated earlier in January that 18A had “over-delivered” in 2025, indicating that it’s mature enough for volume production. The company’s new Intel Core Ultra Series 3 processor, built on this technology, is expected to power more than 200 designs from global manufacturers, signaling a major push into AI-enabled PCs.

Still, the company’s financials reveal ongoing challenges. Intel reported a net loss of $600 million, or 12 cents per diluted share, for the fourth quarter—wider than the $100 million loss, or 3 cents per share, posted a year ago. For the full year 2025, revenue was essentially flat at $52.9 billion, with adjusted earnings per share of 42 cents, a marked improvement from a loss of 13 cents per share in 2024.

Not all segments of Intel’s business are moving in the same direction. The Data Center and AI division is thriving, but the Client Computing Group—which includes chips for laptops—saw sales fall 7% year-over-year to $8.2 billion. The foundry business, which manufactures chips for other companies, brought in $4.5 billion in revenue for the quarter, though some of that came from making Intel’s own chips. There’s also growing optimism about Intel’s future as a contract chipmaker, especially after the company completed a $5 billion stock sale to Nvidia and attracted major investments from the U.S. government and SoftBank in 2025.

Looking ahead, Zinsner told CNBC that customers for Intel’s next-generation 14A technology should begin to materialize in the second half of 2026. However, he cautioned that announcements would likely be scarce: “Once we get them, we’re gonna need to start really spending capital on the 14A front, and that’s how you’ll know.” In the meantime, the company’s guidance suggests a bumpy road, at least in the short term.

Market analysts and industry watchers have weighed in on Intel’s predicament. Ryan Lee, senior vice president at ETF provider Direxion, noted that while demand for Intel chips remains strong, the stock had been “priced for perfection” after doubling in just four months. Lee pointed out that management highlighted higher memory chip prices as a potential issue for the second half of 2026. “If production yields do not increase to help offset the rising costs of memory, [Intel] could struggle relative to peers,” Lee commented in an email, as reported by MarketWatch.

Despite the near-term turbulence, some investors remain optimistic about Intel’s long-term prospects, especially as it transitions to advanced manufacturing processes and AI-centric products. The company’s 18A and soon-to-arrive 14A technologies are seen as crucial to regaining ground lost to Asian competitors like TSMC and Samsung. The ramp-up of Intel’s Arizona chip fabrication facility, highlighted in a recent CNBC feature, is part of this broader strategy to reestablish U.S. leadership in semiconductor manufacturing.

Yet, there’s no denying that Intel faces a tough balancing act. On the one hand, the company is racing to meet surging demand for chips powering everything from AI servers to next-generation laptops. On the other, it must overcome supply chain bottlenecks and improve yields to avoid being left behind as competitors push their own cutting-edge technologies to market.

For now, Intel’s story is one of promise colliding with reality—a company with undeniable technological strengths but significant operational hurdles to clear. Whether the coming quarters will see Intel reclaim its place at the top of the semiconductor world remains to be seen, but one thing is certain: the stakes, and the scrutiny, have never been higher.