Intel’s revenue rose 21 percent in the third quarter, beating analyst expectations. Even so, Intel’s stock lost more than twenty percent after the announcement, because the chipmaker predicts a sharp decline in its PC division.
Intel announced its results for the third quarter of 2026 on Thursday, after the US stock market closed. In after-hours trading, the stock lost more than twenty percent against its closing price of 92.07 dollars. Since January, the chipmaker’s share price had risen by around 150 percent.
Outlook weighs on stock
Investors reacted mainly to what Intel expects for the coming months. For the fourth quarter, the company is aiming for 15 to 16 billion dollars in revenue, less than the 16.5 billion of the past quarter. Analysts had counted on 17.1 billion dollars. Profit would more than halve compared with the third quarter.
Part of that decline stems from an explosion at Intel’s plant in Kiryat Gat, Israel, in which two workers died this month. Production there will be halted for an extended period, which will cost Intel roughly 300 million dollars in revenue in the fourth quarter. In addition, Intel will invest considerably more in production capacity next year and expects to spend more money than it brings in during 2027.
Revenue up 21 percent
Intel brought in 16.5 billion dollars in revenue in the third quarter, 21 percent more than the 13.7 billion of a year earlier. According to CFO David Zinsner, revenue and profit were higher than Intel itself had projected.
On the bottom line, Intel retained 3.3 billion dollars in profit. A year earlier, that was 4.1 billion dollars. That amount was, however, boosted by the sale of a majority stake in chip subsidiary Altera. Excluding such one-off items, profit rose from 1 billion to 2.8 billion dollars.
Data center division grows
The strongest division is the one for data centers and AI. Its revenue rose 78 percent to 7.3 billion dollars. Intel is achieving its biggest growth in fifteen years there. Demand for Xeon server processors exceeds what Intel can produce. “I am disappointed that we could not keep up with our customers’ strong demand this quarter,” says CEO Lip-Bu Tan. He expects the market for server processors could grow up to five times larger, mainly because of AI agents.
Intel Foundry, the relatively young separate division that manufactures chips, saw its revenue rise 58 percent to 6.7 billion dollars. That revenue comes largely from Intel’s own product divisions, and the fabs still ran a loss of almost 1.9 billion dollars in the third quarter.
PC division slows
The division that supplies processors for PCs and laptops remains Intel’s largest, at 8.1 billion dollars. Its revenue did fall five percent compared with last year, and the division’s profit also dropped, from 2.7 to 2.3 billion dollars. For the fourth quarter, Intel expects PC revenue to come in more than twenty percent lower again than in the third quarter.
We expect the slowdown in the PC market to continue at least into the first half of next year.
David Zinsner, CFO Intel
According to Intel, the decline in the PC market accelerated over the past two months. The company also attributes this to high memory prices and tight IT budgets. “We expect the slowdown in the PC market to continue at least into the first half of next year,” says Zinsner.
AI data centers soak up memory
Intel’s PC division thus follows the broader PC market. According to IDC, around five percent fewer new PCs were sold in the second quarter of 2026 than a year earlier, ending nine quarters of growth. Market leader Lenovo sold two percent less, HP nine percent and Dell five percent. IDC points to the RAM shortage as the main cause.
That shortage is a consequence of the AI hype. Big tech companies are investing hundreds of billions in AI data centers, and these require enormous amounts of specialised memory such as high-bandwidth memory (HBM). Memory manufacturers such as Samsung, SK Hynix and Micron are shifting their production to that AI hardware. Since the end of 2025, prices of RAM and SSDs have as a result sometimes tripled or quadrupled. PC makers are raising their prices or putting less memory in their entry-level models.
Intel and the AI hype
The AI hype also hits Intel, which earns its money mainly from processors, from two sides. In data centers, AI applications are pushing demand for Xeon processors above what Intel can deliver. In the PC market, those same data centers are claiming the memory that PC makers need. A laptop without RAM does not leave the factory. PC makers that cannot find affordable memory build fewer devices and order fewer processors.
As long as memory is the scarcest component, it determines how many processors and other components the PC market can absorb. Intel is not optimistic about the memory market in 2027. IDC expects the shortage of memory chips to ease only in early 2028 and memory suppliers to raise their prices even further next year.