Intel Corporation has recently forecasted lower-than-expected revenue and profit for the first quarter of the year. The company struggles to meet the high demand for traditional server chips, especially those used in artificial intelligence data centers. This news resulted in a 7% decline in Intel’s share price during after-hours trading.
First Quarter Financial Outlook
Intel anticipates that its first-quarter revenue will fall between US$11.7 billion and US$12.7 billion. This projection is below analysts’ expectations, which averaged US$12.51 billion. Moreover, the expected adjusted earnings per share are projected to break even instead of the anticipated 5 cents per share.
Impact of AI Demand
Several major tech firms are expanding their data centers to enhance their AI capabilities. However, this rapid build-out has caught some cloud-computing giants by surprise. As noted by Intel’s finance chief, David Zinsner, these companies are now scrambling to upgrade their aging chip fleets.
Strategic Changes Under New Leadership
Intel has been facing challenges in the AI chip market due to previous missteps that significantly affected its finances. Under the leadership of CEO Pat Gelsinger’s successor, the company has implemented a turnaround strategy focused on cutting costs and streamlining management. This new approach aims to enhance Intel’s financial stability.
Investment and Stock Performance
- Intel received substantial investments last year, including:
- US$5 billion from Nvidia
- US$2 billion from SoftBank
- An investment from the U.S. government
- Despite a significant drop in share prices over the previous year, Intel’s stock gained 84% in 2025.
- In addition, shares have risen over 40% this month alone.
New Product Developments
Intel recently commenced shipping its new “Panther Lake” PC chips, marking the first products made with its new 18A manufacturing technology. Analysts are concerned that the ramp-up in production may negatively impact profit margins, as a low yield of usable chips has been reported during initial production phases.
Challenges in the PC Market
Intel is also facing stiff competition in the PC market from rivals such as AMD and Arm Holdings. Furthermore, a global shortage of memory chips has led to increased prices for these components, driving up costs for personal computers, a key market segment for Intel.
Future Expectations
David Zinsner has expressed optimism about the company’s supply issues, stating that he expects the supply to hit its lowest point in the first quarter but improve in the subsequent quarters. This aligns with Intel’s efforts to navigate through current industry-wide shortages.
