Intel Q3: revenue rises 21% to $16.5 billion, weak outlook sinks shares

Intel reported revenue of $16.5 billion for the third quarter of 2026 on Thursday, October 29, 2026, up 21% from a year earlier, as sales of chips for data centres and artificial intelligence (AI) work grew strongly. But the company forecast lower revenue for the October to December quarter, citing an incident at its Fab 28 chip plant in Israel and a sharp slowdown in personal computers, and its shares fell by about a fifth in trading after the US market closed.

Intel is one of the two big makers of the main processors inside the world's laptops and desktop computers, and it is trying to win back ground in data centre chips, where rivals have taken share. The third-quarter numbers show that part of its turnaround is working. Demand for server processors that sit alongside AI accelerators has risen fast, and the data centre unit was the main reason total revenue grew by a fifth.

The PC business tells a different story. Intel said the PC market weakened sharply during the quarter. Summaries of the earnings call link this to higher memory chip prices, limited memory supply and tight IT budgets at companies. When memory costs rise, PC makers either raise prices or build fewer machines, and both mean fewer processors sold. Intel expects client computing revenue to fall by more than 20% from the third quarter to the fourth.

The third factor is the Fab 28 incident in Israel. A fab is a chip factory, and Fab 28 is Intel's manufacturing plant at Kiryat Gat in southern Israel. Intel's chief financial officer, David Zinsner, said on the call that the disruption would take about $300 million off fourth-quarter revenue. Investors also worried about how much money Intel will need to spend on new factories in 2027, according to market reports.

Gross margin is the share of revenue left after the direct cost of making the chips. A forecast drop from 44.1% to about 38% means each dollar of sales will earn Intel less in the coming quarter, which is why the share price reacted more to the outlook than to the strong third quarter.

Intel's chief executive, Lip-Bu Tan, said the company's execution was improving as it increased supply to meet strong demand for AI computing, according to the earnings release.

Short-term: The after-hours fall points to a weak session for Intel's shares on Friday, October 30, and may weigh on other chip stocks. PC makers that use Intel processors may see tighter supply and higher component costs in the holiday quarter, a period when many people buy laptops.

Long-term: The results suggest Intel's future depends more on data centre and AI chips than on PCs. Whether it can keep growing that unit while paying for new factories will decide how far its turnaround goes.

Who is affected: Intel's shareholders and employees; PC makers and their customers, including buyers in India, where laptop prices are already under pressure from memory costs; companies building AI data centres that buy Intel server processors; and rival chip makers whose results are compared with Intel's.

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