Intel Shares Plunge After Weak Forecast And Supply Woes

Intel Corporation, the storied American chipmaker, delivered its much-anticipated fourth-quarter 2025 earnings report on January 22, 2026, after a year marked by wild swings and a dramatic rally in its share price. Investors and analysts alike had their eyes glued to the numbers, hoping for a clear signal that the company’s long-promised turnaround was taking hold. Instead, the results were a mixed bag: strong performance in some areas, but a gloomy forecast for the months ahead that sent the stock tumbling after hours.

According to 24/7 Wall St, Intel shares had surged an eye-popping 47% year to date and nearly 150% over the past 12 months, hitting $54.35 on January 22—just shy of its 52-week high. The rally was fueled by a combination of analyst upgrades, optimism about artificial intelligence (AI) demand, and hopes that Intel’s new leadership could deliver a comeback. But as the market closed and the results rolled in, the mood shifted quickly.

Intel reported adjusted earnings per share (EPS) of $0.15, handily beating Wall Street’s estimate of $0.08. Revenue came in at $13.7 billion, also topping the expected $13.4 billion, though it was still down 4% year-over-year. Net income, however, was a loss of $0.6 billion—worse than the anticipated $0.3 billion loss. The company’s gross margin for the quarter was 37.9%, well below the 45.7% it posted in the same period a year earlier.

While these headline numbers looked solid, the real trouble came with Intel’s guidance for the first quarter of 2026. The company projected revenue between $11.7 billion and $12.7 billion, with a midpoint below Wall Street’s $12.5 billion estimate. Gross margin guidance was also disappointing at 34.5%, missing analysts’ consensus of 36.5%. As Barron’s reported, this weak outlook triggered a sharp sell-off, with shares dropping about 6.5% immediately after the report and falling as much as 13% in after-hours trading, according to Bloomberg.

Intel’s leadership was quick to address the concerns. CEO Lip-Bu Tan acknowledged the challenges but struck a note of determination. "Our conviction in the essential role of CPUs in the AI era continues to grow," Tan said during the earnings call. "We delivered a solid finish to the year and made progress on our journey to build a new Intel. The introduction of our first products on Intel 18A—the most advanced process technology developed and manufactured in the United States—marks an important milestone, and we’re working aggressively to grow supply to meet strong customer demand. Our priorities are clear: sharpen execution, reinvigorate engineering excellence, and fully capitalize on the vast opportunity AI presents across all of our businesses."

The company’s Chief Financial Officer, David Zinsner, echoed this cautiously optimistic tone, emphasizing that the current supply shortages would be at their worst in the first quarter but should improve as the year goes on. "We exceeded Q4 expectations across revenue, gross margin, and EPS even as we navigated industry-wide supply shortages. We expect our available supply to be at its lowest level in Q1 before improving in Q2 and beyond. Demand fundamentals across our core markets remain healthy as the rapid adoption of AI reinforces the importance of the x86 ecosystem as the world’s most widely deployed high-performance compute architecture," Zinsner told analysts.

Yet, for many on Wall Street, the company’s explanations weren’t enough to offset concerns about manufacturing snags and the disappointing near-term outlook. According to Bloomberg, Tan admitted during the conference call that it would take "time and resolve" to turn around the company’s manufacturing fortunes—a frank assessment that left some investors rattled. The report noted that these ongoing manufacturing issues have hampered Intel’s comeback bid, despite the launch of new products and process technologies.

Drilling down into the numbers, Intel’s Data Center and AI (DCAI) group was a bright spot, with revenue rising 9% year-over-year to $4.7 billion in Q4. This was a welcome reversal from the previous quarter, when DCAI revenue fell 1% to $4.1 billion. The company’s Foundry business also grew, with revenue up 4% to $4.5 billion. However, the Client Computing Group, which includes Intel’s core PC chips, saw revenue drop 7% to $8.2 billion, and all other revenue fell a steep 48% to $0.6 billion.

On the cost side, Intel made some headway: operating income increased 12% year-over-year to $1.2 billion, operating expenses fell 14% to $4.0 billion, and research and development expenses dropped 17% to $3.2 billion. Free cash flow was a rare highlight, jumping 52% to $4.3 billion. But the company’s effective tax rate soared to 198.5%, adding to the headwinds.

Analyst reactions were mixed, reflecting the uncertainty swirling around Intel’s future. KeyBanc and Seaport Research both upgraded their outlooks, while UBS issued a buy rating, citing improving fundamentals and strong demand for PCs and servers. RBC Capital, however, maintained a hold rating with a $50 price target, urging caution after such a sharp run-up in the stock. Market consensus for the full year 2026 is for $54.04 billion in revenue and $0.61 in adjusted earnings per share—ambitious targets that will require Intel to execute flawlessly in the months ahead.

One key area of focus for investors is Intel’s ability to capitalize on the AI boom. The company has been touting its partnerships with NVIDIA and a $2 billion investment from SoftBank as evidence that it’s well-positioned to ride the next wave of technology demand. But as 24/7 Wall St noted, Intel’s stock trades at a lofty 80x forward earnings, leaving little room for error if margins continue to lag and manufacturing woes persist.

Looking ahead, Wall Street will be scrutinizing Intel’s progress on its foundry strategy and its efforts to address CPU supply shortages. Many analysts believe that a potential CPU shortage this year could give Intel significant pricing power, especially as demand for AI and high-performance computing continues to climb. But as the latest results show, the path forward is anything but certain.

For now, Intel’s turnaround remains a work in progress. The company has made undeniable strides in some areas, particularly in data center and AI, but it still faces steep challenges in manufacturing and maintaining profitability. As CEO Lip-Bu Tan put it, rebuilding Intel’s reputation and market share will require both "time and resolve." Investors, it seems, will need plenty of both as they wait to see whether this iconic chipmaker can truly deliver on its promises.