Intel’s latest first-quarter outlook has rattled investors, with the chipmaker warning that sales and profits will land below Wall Street expectations as it struggles to supply in-demand data-center chips tied to artificial intelligence workloads.
In Reuters reports dated Jan. 22 and Jan. 23, Intel said demand is rising for its traditional server chips used in AI data centers, but internal supply constraints are limiting how much it can ship—setting up a tougher near-term picture even as the broader AI buildout continues.
Weak outlook triggers selloff
Intel forecast first-quarter revenue of $11.7 billion to $12.7 billion, compared with an analyst average estimate of $12.51 billion, according to LSEG data cited by Reuters.
The company also said it expects adjusted earnings per share to break even in the first quarter, versus expectations for an adjusted profit of 5 cents per share.
After Intel released its outlook, its shares fell roughly 5% in extended trading in the Jan. 22 report.
In the Jan. 23 report carried on Yahoo Finance, Intel shares fell 12% in premarket trading, reflecting investor concern that the company could not meet strong AI-driven demand for data-center chips.
If the premarket decline held, it would translate to about $31 billion being wiped from Intel’s market value.
AI demand is up, but supply is tight
Investors have been counting on massive data-center buildouts by large technology companies to lift sales of Intel’s traditional server chips, which are used alongside Nvidia’s market-leading graphics processing units.
But Intel has struggled to match supply to that demand, even while running its factories at full capacity, according to the Jan. 23 report.
Intel Chief Financial Officer David Zinsner said supply availability is expected to be at its lowest in the first quarter and then improve in the second quarter and beyond.
The report said Jefferies analysts also expected Intel’s supply constraints to bottom out in March.
The same report said Oppenheimer’s view was that shortages should begin easing in the second quarter.
Production transition and PC-market risks
Intel is dealing with delays in transitioning its semiconductor production, which has made it harder to ramp output of its data-center processors.
The Jan. 23 report also pointed to a global memory supply shortage, warning that anticipated price increases could weigh on demand in personal computers—Intel’s largest market.
Hopes in that PC segment had been tied to Intel’s new “Panther Lake” PC chips, which were expected to help the company after it lost market share to AMD.
In the Jan. 22 report, Intel also cited industry-wide supply shortages, with Zinsner saying, “We navigated industry-wide supply shortages,” while reiterating expectations that supply would be weakest in Q1 before improving later.
Leadership details differ across reports
The Jan. 22 report described Intel’s turnaround strategy under CEO Pat Gelsinger, saying he had pushed a revival plan focused on cost cuts, streamlined management, and a new product strategy.
However, the Jan. 23 report described Intel’s strategy under CEO Lip-Bu Tan, saying he has emphasized cost reductions and pulling back on large contract manufacturing plans.
The report also said Tan’s comments on a post-earnings call indicated two customers had progressed to evaluating the technical specifications of Intel’s upcoming 14A manufacturing technology.
