What Was Behind Intel’s Post-EPS Plunge?
Last week, Intel (INTC) shares plunged 28% in a single-session after the company reported third-quarter results. In light of the Intel news, fellow chipmakers like Advanced Micro Devices (AMD) were dragged down by investors in sympathy.
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Intel: Earnings Beat Expectations, Falls Short
Intel’s earnings were very strong, up 126% year over year and beating Wall Street analyst expectations. However, investors punished Intel shares with the worst single-session stock decline in decades after abysmal guidance. Intel’s guidance range of $15-$16B fell dramatically short of Wall Street’s $17.1B estimate.
PC Sales Are a Headwind for Intel
Intel plunged largely due to a severe downturn in PC sales. Intel’s core Client Computing Group (PC segment) continues to suffer from soaring memory and component costs (such as DRAM and SSDs). Management noted that PC unit shipments are expected to drop roughly 12% in 2026 and another 10% in 2027 as consumers and enterprise budgets shrink.
Intel is Heavily Reliant on PC Demand
Unlike other chip leaders like AMD and Nvidia (NVDA), Intel relies more heavily on the PC market. Roughly half of its revenue dependends on PC demand. In addition, Intel’s margins are being squeezed, and it cannot meet full demand due to industry-wide shortages of chip-packaging substrates and wafers.
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AMD’s Data Center Business is Exploding
Tuesday, AMD’s Q3 earnings helped to clear the air. AMD reported year-over-year revenues that jumped 74% while earnings grew 45%. However, the most important quote came from CEO Lisa Su:
“We now expect revenue to grow more than 80% in 2027. Data Center is now expected to account for over 80% of AMD’s total revenue in 2027, up from 64% in Q3.”
In other words, AMD is less a PC company and more an AI-first company now benefiting from surging demand.
Intel’s Issues are AMD’s Opportunity
Intel disclosed that it expects agentic AI to expand the server CPU market 5x to over $200B while admitting supply cannot keep up with demand. This supply-demand imbalance creates an opportunity for AMD to steal market share from Intel.
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Bottom Line
Recent earnings results show diverging paths for Intel and AMD. While Intel relies heavily on its legacy PC business, AMD is capitalizing on the unprecedented AI data center buildout.
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This article originally published on Zacks Investment Research (zacks.com).
