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A temporary Intel office during the 2022 World Economic Forum in Davos, Switzerland, in 2022.ARND WIEGMANN/Reuters
Intel INTC-Q forecast first-quarter revenue and profit below market estimates on Thursday, as it struggles to match supply to booming demand for traditional server chips used in artificial intelligence data centers.
Intel shares were down 7 per cent in after-hours trading.
Intel forecast current-quarter revenue at between US$11.7-billion and US$12.7-billion, compared with analysts’ average estimate of US$12.51-billion, according to data compiled by LSEG.
It expects adjusted earnings per share to break even in the first quarter, compared with expectations of adjusted earnings of 5 US cents per share.
Investors and analysts have hoped that rapid data center buildouts commissioned by large tech companies to advance their AI businesses will drive sales for Intel’s traditional server chips that are used alongside Nvidia’s market-leading graphics processing units.
Demand for AI surprised some of the cloud-computing giants, which have had to scramble in order to upgrade aging fleets of chips because of an “erosion in networking performance,” finance chief David Zinsner told Reuters in an interview.
“They were all a little bit caught off guard,” Zinsner said.
After years of missteps left Intel struggling in the fast-growing AI chip market and drained its finances, Tan has engineered a turnaround strategy centered on cutting costs and eliminating management layers, while championing a fresh product road map. With a slew of high-profile investments in Intel last year – a US$5-billion investment from Nvidia, US$2-billion from SoftBank and a U.S. government stake in the company – investors’ confidence in the company’s revival has been high.
Tan has also significantly pared back contract manufacturing ambitions promoted by his predecessor, Pat Gelsinger, in an effort to shore up Intel’s balance sheet after capital-intensive expansions pummeled margins.
After a more than 60-per-cent drop in its share price in 2024, Intel’s stock gained 84-per-cent in 2025, far outperforming the benchmark semiconductor index’s 42-per-cent rise. Its shares are up more than 40 per cent so far this month.
The company has started shipping its new “Panther Lake” PC chips – the first product made using Intel’s make-or-break 18A manufacturing technology, and analysts expected the production ramp-up to hurt margins. Reuters has reported that only a small percentage of the chips printed via 18A have been good enough to make available to customers. Intel has said its yields, or the number of good chips per silicon wafer, are improving monthly. Weak yields also routinely pressure margins.
A global shortage of memory chips has boosted memory chip prices and made personal computers – a key market for Intel – more expensive.
“We navigated industry-wide supply shortages,” said David Zinsner, Intel’s chief financial officer. “We expect our available supply to be at its lowest level in Q1 before improving in Q2 and beyond.”
Intel has also been consistently losing share in the PC market to rival AMD and chip blueprint designer Arm Holdings ARM-Q.
