Intel stock sinks 21% after hours despite eighth straight earnings beat
A strong AI and data center quarter was overshadowed by a softer outlook, an Israel plant disruption and weak PC demand, a reminder for Indian investors that beating estimates is no longer enough.
Intel reported better-than-expected third-quarter 2026 results, with adjusted earnings of $0.52 a share against the $0.40 analysts expected, yet its shares tumbled about 20.9% in after-hours trading to $72.85 from a regular-session close of $92.07. Revenue came in at $16.5 billion, just ahead of the $16.48 billion forecast.
For anyone reading this over the morning chai before checking the Sensex and Nifty, the lesson is familiar: markets trade on what comes next, not on what just happened. Investors focused on a weaker fourth-quarter outlook, softer guidance for the first half of 2027 and a $300 million hit tied to a plant shutdown in Israel.
The bright spot was the data center and AI unit, where revenue reached $7.3 billion, up 17% from the previous quarter and nearly 80% from a year earlier. Intel said demand is still running ahead of supply across hyperscale, enterprise and neo-cloud customers. It marked the company's eighth consecutive quarter of beating expectations.
The weak spot was PCs. Client computing revenue fell 9% sequentially to $8.1 billion as memory shortages and higher system prices dented demand, although AI PC revenue grew 35% from a year ago. That matters for India, one of the world's big laptop and desktop markets, where pricier machines can delay purchases by students, offices and small businesses.
Intel's foundry arm, the contract chipmaking business it is trying to build, posted $6.7 billion in revenue, up 16% sequentially, and external foundry sales rose to $411 million. The company says yields and costs are improving on its Intel 3 and 18A processes, but the unit is still losing money.
The balance sheet offers some comfort. Intel reported gross margin of 44.1%, operating cash flow of $5.91 billion, about $54 billion in cash and short-term investments, and expanded borrowing capacity of $15 billion. Even after the drop, the stock is up sharply this year, so part of the sell-off may be profit-taking after a rally of roughly 150%.
The takeaway for Indian investors tracking global tech: the AI boom is real, but expectations are priced high and uneven growth gets punished. Details are in the Investing.com earnings call transcript report.