Intel Q1 Profit Outlook Hits Zero, Shares Drop 12%

On January 22, after the U.S. market closed, Intel released its fourth-quarter and full-year financial results for the period ending December 27, 2025. While both quarterly and annual figures came in ahead of market expectations and AI-related revenue posted mid-to-high single-digit growth, weaker-than-expected guidance for the first quarter of 2026 overshadowed the report. As a result, Intel shares fell 11.86% in after-hours trading.

Intel reported fourth-quarter revenue of USD 13.7 billion, down 4.1% year over year but up 3% quarter over quarter. The figure exceeded analysts’ expectations of USD 13.43 billion and came in above the company's prior guidance range of USD 12.8–13.8 billion.

Under GAAP accounting, Intel posted a net loss of USD 600 million, or a loss of USD 0.12 per share, compared with a net loss of USD 100 million in the same period last year. On a non-GAAP basis, earnings per share reached USD 0.15, up 15.4% year over year and well above analyst expectations of USD 0.087 and Intel's own guidance of USD 0.08, although lower than the previous quarter's USD 0.23. Non-GAAP gross margin was 37.9%, beating expectations of 36.5% but falling from 40.0% last quarter and 42.1% a year earlier. Operating margin came in at 8.8%, above market forecasts but below both the prior quarter and last year.

Looking at individual segments, the Client Computing Group generated USD 8.19 billion in revenue, down 6.6% year over year and slightly below expectations, indicating renewed pressure on the PC market after a brief recovery. The Data Center and AI segment delivered stronger performance, with revenue rising 8.9% year over year to USD 4.74 billion, supported by continued investment in AI infrastructure from major cloud and technology players. Intel Foundry reported USD 4.51 billion in revenue, up 3.8% year over year and above expectations, although profitability in this business remains a work in progress.

For the first quarter of 2026, Intel guided revenue to a range of USD 11.7–12.7 billion, with a midpoint of USD 12.2 billion, below the market consensus of around USD 12.6 billion. GAAP gross margin is expected to fall to 32.3%. On a non-GAAP basis, Intel forecast earnings per share of USD 0.00, compared with analyst expectations of USD 0.08, and a gross margin of 34.5%, also below expectations. Adjusted operating expenses are projected at around USD 16 billion, slightly higher than anticipated.

To address strong demand for data center CPUs amid ongoing supply constraints caused by yield and capacity challenges, Intel plans to increase equipment investment across Intel 7, Intel 3, and Intel 18A process nodes. The company also aims to boost output by improving yields and shortening cycle times, signaling a continued focus on manufacturing execution as AI workloads drive demand.