TLDR
- Intel stock tumbled 13% in extended trading after the company issued soft first-quarter guidance
- Production yield challenges prevent Intel from fulfilling strong demand for AI data center chips
- Q1 revenue guidance of $11.7-12.7 billion came in below the $12.51 billion consensus estimate
- The company’s 18A manufacturing process yields continue improving but remain below management expectations
- Intel posted a $600 million net loss for Q4 versus a $100 million loss in the year-ago period
Intel watched its shares crater 13% Thursday evening even after posting solid fourth-quarter results. The damage came from disappointing forward guidance that caught investors off guard.
The chipmaker delivered Q4 adjusted earnings of 15 cents per share on $13.7 billion in revenue. Both metrics beat Wall Street estimates. But the outlook painted a different picture.
Intel guided for first-quarter revenue of $11.7 billion to $12.7 billion. Analysts expected $12.51 billion. The company also projects breakeven adjusted earnings per share versus the 5-cent consensus.
CFO David Zinsner pointed to supply shortages as the main issue. He explained to CNBC that Intel can’t meet seasonal demand with current production levels. He expects conditions to improve in Q2.
CEO Lip-Bu Tan addressed manufacturing efficiency during the analyst call. Production yields fall short of where they need to be. “Our yields are in line with our internal plans,” Tan explained. “They are still below what I want them to be.”
Production Problems Create Revenue Gap
Intel faces an enviable problem for a struggling chipmaker. Customer demand exceeds production capacity. This issue particularly impacts server processors used alongside Nvidia GPUs in AI data centers.
Intel runs factories at full capacity but can’t fill all orders. The company misses out on profitable sales opportunities. “In the short term, I’m disappointed that we are not able to fully meet the demand in our markets,” Tan said on the call.
The production crunch focuses on Intel’s 18A manufacturing technology. The company launched Panther Lake PC chips using this process. However, manufacturing yields create ongoing challenges.
Earlier reports indicated only a small percentage of 18A chips meet quality standards. Weak yields pressure profit margins. Tan confirmed monthly improvements but acknowledged current levels remain inadequate.
Data Center and AI revenue totaled $4.7 billion in the quarter, growing 9% year-over-year. Client Computing Group revenue declined 7% to $8.2 billion as PC demand weakened.
Intel recorded a $600 million net loss, or 12 cents per diluted share. This compares to a $100 million loss in the same quarter of 2024.
Looking Forward to 14A
Zinsner revealed Intel hasn’t made substantial 14A manufacturing investments yet. The company waits for a large customer commitment before ramping spending. Two customers currently evaluate the technology’s specifications.
Intel expects to know by mid-2026 whether external customers will adopt 14A. Zinsner said investors can watch for capital expenditure increases as signals of new customer agreements.
The foundry business generated $4.5 billion in quarterly revenue. This includes chips manufactured for Intel’s own products. Tan emphasized aggressive efforts to increase 18A supply.
Intel completed its $5 billion stock sale to Nvidia during the quarter. SoftBank put in $2 billion and the U.S. government also acquired a stake last year.
Zinsner told Reuters that cloud computing giants underestimated AI demand growth. They rushed to upgrade aging chip infrastructure suffering from network performance issues. Intel struggles to quickly adjust production between different chip varieties.
Global memory chip shortages elevated prices and increased PC costs. Zinsner anticipates the tightest supply constraints in Q1 with relief coming in Q2.
Intel stock jumped 147% over the past year on optimism around foundry business prospects and new manufacturing technologies. Shares gained 84% in 2025, outperforming the semiconductor index’s 42% climb.
Zinsner told CNBC that capital expenditure will likely remain flat rather than decrease as previously forecast.
