Intel entered its latest earnings report with a story that seemed to be gaining momentum. Third quarter results were solid, with adjusted earnings of 52 cents per share beating expectations of 40 cents and revenue climbing 21 percent year over year to 16.5 billion dollars. Data center revenue surged 78 percent, fueled by demand for server chips, and for a moment the narrative looked encouraging. Yet the market was not prepared for what came next.
The fourth quarter guidance told a very different story. Intel projected adjusted earnings of 25 cents per share on revenue of 15 billion to 16 billion dollars, well short of analyst estimates for 43 cents and 17 billion dollars. The shortfall was driven largely by a sudden deterioration in the PC market. Intel now expects PC shipments to fall 10 percent next year, following a 12 percent decline in 2026, and believes the slump could persist through at least the first half of 2027. Strong server demand had allowed investors to overlook the weakening PC outlook, but this quarter made the problem impossible to ignore.
The reaction from Wall Street was swift and unforgiving. Bank of America downgraded Intel to neutral from buy and slashed its price target to 100 dollars from 145, arguing that the turnaround has been pushed out and that Intel has not shown enough traction with external foundry customers. Roth Capital also moved to neutral, cutting its target to 70 dollars, while UBS, Bernstein, Wells Fargo, and Barclays all lowered their targets in a wave of revisions. Morningstar reduced its fair value estimate as well, noting that the PC slowdown is now arriving aggressively and hitting the company hard. The stock fell roughly 25 percent, marking one of its worst trading days in decades.
The central question now is whether Intel’s data center strength can carry the company through a prolonged PC downturn. Server demand remains robust, but shortages in manufacturing capacity and substrates could limit how much of that demand Intel can actually capture. Meanwhile, the PC business, which had shown resilience earlier in the year despite high memory prices, is deteriorating faster than anyone anticipated. For investors, the message from analysts is clear: the turnaround story is no longer a matter of if, but when, and that timeline has just been pushed further out.
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