Intel’s $15 billion to $16 billion outlook falls short of estimates as manufacturing comes under pressure
Key Facts
Intel forecast fourth-quarter revenue of $15 billion to $16 billion, below the analyst average estimate of $17.07 billion, and adjusted earnings of 25 cents per share, versus estimates of 43 cents, Reuters reported. The guidance leaves the company facing a revenue and adjusted-profitability gap as it enters the final quarter of 2026. The announcement came amid production pressures, including a disruption at a plant in Israel and an expected decline in personal-computer chip activity. Intel shares fell 20% on Thursday, October 29, according to Reuters coverage carried by Investing.com. In regular trading that day, the stock closed at $92.07, compared with $95.53 on October 28, according to EL7 data.
Chief Financial Officer David Zinsner told Reuters that an explosion at the company’s Kiryat Gat plant cut its fourth-quarter revenue outlook by about $300 million and reduced its gross-margin forecast by about 200 basis points. He added that the company expects a similar impact in the first quarter, extending the disruption beyond the current period. Reuters reported that the plant was shut for two weeks and that the company planned to increase production there by the end of the week of October 29. The disruption links the operational problem to the financial outlook, weighing on revenue and margins at the same time. Intel said the explosion would result in about $600 million in lost revenue over two quarters, while reducing supplies of AI server chips to cloud-computing customers.
Alongside supply constraints, Intel forecast that personal-computer chip revenue would decline in the mid-20s percentage range in the fourth quarter. Revenue at its Client Computing and Physical AI group fell 5% to $8.10 billion in the third quarter, Reuters reported. The outlook points to expected weakness in the group’s business compared with the previous period, alongside the manufacturing pressures facing the company. Zinsner said Intel does not expect positive cash flow during 2026 as it continues to expand manufacturing capacity. Reuters also reported that the company is proceeding with $20 billion in capital spending during 2026, with spending set to rise sharply in 2027 to secure more chipmaking tools.
Alphabet offered a different picture: revenue rose 25% year over year to $127.58 billion in the third quarter, but remained below the FactSet average estimate of $127.97 billion. Earnings per share were $2.12, compared with expectations of about $3.01, the Associated Press reported. Net income fell to $26.17 billion from $34.98 billion in the same period a year earlier. AP attributed part of the results’ impact to an $8.7 billion loss on equity investments, which reduced earnings per share by 55 cents. Alphabet shares fell 11% in after-hours trading following the results, according to Axios.
By contrast, Google Cloud revenue rose 103% year over year to $30.7 billion, and Alphabet said the unit posted record growth, according to AP. But free cash flow was negative $9.1 billion in the third quarter, compared with expectations of negative $2.23 billion, Axios reported. The contrast between cloud growth and a widening cash deficit focuses attention on the scale of spending needed to expand AI-related infrastructure. AP reported that Alphabet expects capital expenditures to rise significantly in 2027. The chief financial officer said the company would provide more details during its fourth-quarter earnings call.
In regular trading, Alphabet shares closed at $283.82 on October 29, compared with $324.89 the previous day, according to EL7 data. In the chip sector, Nvidia, Broadcom, AMD, Micron, Qualcomm and Arm shares fell between 1% and 6% in extended trading after Intel’s outlook, Reuters reported. The Philadelphia Semiconductor Index fell 1.4% during regular trading on Thursday, Reuters reported via Fidelity. Intel’s chief financial officer said the costs of its 18A manufacturing technology, used in Panther Lake chips, have fallen 40% since the first quarter of 2026. The figures put cost reductions and production expansion at the center of the company’s efforts to improve manufacturing economics, while the Kiryat Gat plant is still scheduled to ramp up production by the end of the week of October 29.