Intel Reports Q3 Revenue Beat but Shares Plunge 20% on Weak Guidance
Intel reported third-quarter 2026 revenue of $16.5 billion and EPS of 52 cents, beating expectations. However, shares plunged 20% after issuing a weak fourth-quarter outlook.
Intel reported its financial results for the third quarter of 2026, posting revenue of $16.5 billion, which surpassed analyst expectations of $16.44 billion. Earnings per share stood at 52 cents, beating the consensus estimate of 40 cents. Despite the upbeat quarterly figures, Intel shares plunged by roughly 20% in after-hours trading.
The sharp sell-off was triggered by a weaker-than-expected revenue and margin outlook for the current quarter, interrupting a series of strong reports that had bolstered confidence in the company's turnaround plan. Intel projects revenue between $15 billion and $16 billion for the fourth quarter, falling short of the $17 billion anticipated by analysts. The company attributed the conservative guidance partly to an explosion at its manufacturing plant in Kiryat Gat.
Intel Chief Financial Officer David Zinsner revealed that the incident, which occurred in October 2026, halted plant operations for two weeks. Beyond the revenue hit, Intel expects a 200-basis-point (2%) erosion in fourth-quarter gross margins. Furthermore, the company anticipates that the gross margin will decline to 37%, exacerbated by rising costs stemming from a global shortage of memory chips. Chief Executive Lip-Bu Tan stated that the firm is working urgently to expand its chip supply.
Since CEO Lip-Bu Tan assumed his role in March of last year, Intel has recorded consecutive quarterly revenue growth and positive free cash flow. Over the past two years, the company has consistently beaten revenue estimates and topped earnings-per-share forecasts in 75% of cases. Meanwhile, Intel's planned $2.2 billion acquisition of Israeli firm Classic was not factored into the latest results and is slated to close in the first half of next year.
Market analysts had anticipated a fourth-quarter revenue outlook of $16.9 billion with adjusted earnings of 43 cents per share. Market participants previously expressed concern that rising memory chip costs and soft personal computer sales could pressure profitability. However, others noted that Intel benefits from packaging memory chips produced elsewhere. Growth drivers include strong demand for CPU processors by Intel and AMD for artificial intelligence data centers, efficiency measures, and the America First policies of U.S. President Donald Trump, which led to government stake acquisitions and defense contracts.
Intel has also secured production and packaging contracts with major clients including Tesla, SpaceX, returning partner Apple for M-series Mac processors, and an expanded partnership with Google. Intel shares have surged 159% since the beginning of the year, significantly outperforming the S&P 500 and Nasdaq. According to Wall Street Journal analysts, Intel holds 15 buy ratings, 30 hold ratings, and 5 sell ratings, with an average price target of $95.
