Intel Plunges More Than 20% on a Weak Outlook, Despite an AI Quarter That Delivered
Intel reported a strong quarter on Thursday — revenue up 21 percent, its data-centre and AI business up 78 percent — and its shares still fell more than 20 percent after hours, because guidance for the final quarter fell far short of Wall Street's numbers. Chinese boards trended the plunge within hours.
Intel delivered the kind of quarter its turnaround plan was supposed to produce, and its shareholders sold it anyway. Third-quarter revenue came in at 16.5 billion dollars, up 21 percent year on year; the data-centre and AI division, the business Intel is staking its future on, grew 78 percent. The plunge came from what the company said about the future: fourth-quarter revenue guided to 15–16 billion dollars against analyst expectations near 17 billion, and adjusted earnings per share of 25 cents against forecasts of 43. In after-hours trading the stock fell more than 23 percent, approaching 70 dollars.
The company's own diagnosis had three parts. PC processor demand is soft — the legacy business that still anchors Intel's revenue is shrinking faster than expected. Server chips are constrained by component supply, the rare problem of selling more than the supply chain can feed. And an accident at an Israeli factory is still interfering with production. Chinese financial media tracked the results within hours: Caixin attributed the weak outlook to sluggish PC demand and supply-chain problems in "richly profitable data-centre components," while The Paper noted that Intel is the latest American giant to be sold off hard on results — a day after Google dropped more than 12 percent following its own earnings.
Chinese readers were watching for a second reason too. The White House took a 10 percent stake in Intel last August at 20.47 dollars a share — "the White House's favourite stock," as Hong Kong's HK01 called it — and even after Thursday's plunge the shares sit near 70 dollars, a bet that has roughly trebled for the US government in fifteen months. The sell-off therefore lands on a company that is simultaneously America's subsidised champion and the benchmark its rivals measure themselves against.
That is the frame in which China's tech discourse absorbed the news — the plunge sat on Baidu's search board with a score near seven million — in a season when the home-grown conversations have been about the gaps that remain. This month's benchmarks found Huawei's newest Kirin chip still peaking at half the performance of Apple's, while a Chinese memory-maker, CXMT, made news by refusing Apple a discount — the supplier, for once, holding the cards. Against that backdrop, Intel's stumble reads not as triumph for Chinese chips, which remain behind, but as evidence of something both sides of the Pacific can agree on: the PC-era hierarchy is coming loose, and AI demand is deciding the new one.
The quarter's irony is that Intel's strongest line of business is the one it cannot meet demand for. Whether Thursday's sell-off was a verdict on the company or on a market repricing every chip stock at once is the question the next earnings season will begin to answer.