Intel reported a 21 percent increase in revenue to $16.5 billion for the third quarter, reflecting strong demand for its chips used in artificial intelligence applications in data centers. However, the company also projected fourth-quarter revenue and profit figures below Wall Street expectations, attributing the shortfall primarily to a shortage of memory chips needed for personal computers. This shortage has driven prices higher, forcing PC manufacturers to raise prices and reduce shipments, which in turn has negatively impacted Intel’s PC chip sales.

“We really attribute it to memory prices,” said David Zinsner, Intel’s chief financial officer, explaining a market weakening observed toward the end of August. The company forecasted fourth-quarter revenue between $15 billion and $16 billion, significantly below analyst estimates around $17 billion, and expects its gross profit margin to fall to 37 percent from 43 percent in the prior quarter.

Following the announcement, Intel’s stock price dropped approximately 20 percent in after-hours trading, partially recovering later. The company’s shares had already fallen more than 30 percent since September amid industrywide concerns over a potential slowdown in AI-related spending.

Intel's strong performance in data center chips was highlighted by a 78 percent revenue increase to $7.3 billion during the quarter, driven by higher shipments and prices. Conversely, revenue from its PC chip business declined 5 percent to $8.1 billion. Net income fell 18 percent to $3.3 billion, compared to the same period last year, primarily due to the absence of a one-time gain recorded in the previous year.

The company also experienced a manufacturing disruption from a two-week factory fire at its Israel facility, which resulted in the loss of some silicon wafers. This incident contributed to production challenges during the quarter.

While Intel has historically dominated the CPU market, it has faced challenges competing with companies like Nvidia in the specialized GPU segment favored by AI workloads. Recently, CPUs have regained importance for certain AI tasks involving autonomous digital agents, increasing demand for Intel’s chips in this space. However, the company continues to struggle to meet the demand for CPUs used in servers managing such AI applications.

In addition to its core businesses, Intel’s foundry services—manufacturing chips for outside customers—grew 58 percent to $6.7 billion in the third quarter. Despite this growth, revenue from external clients accounted for only about $400 million, well short of internal product unit sales. The company plans to expand its customer base for packaging services and advance its 14A production process, while also increasing factory capacity with new sites in Arizona and Ohio.

Intel’s planned capital expenditure for 2026 stands at about $20 billion, roughly one-third of the investment projected by Taiwan Semiconductor Manufacturing Company, the industry leader. Industry analysts have suggested that Intel may need additional external funding to close this investment gap and remain competitive in the semiconductor sector. “There is a window for Intel,” noted market expert Handel Jones, “but they have to have external funding.”