Intel’s data center sales jumped 78%, yet its stock fell 16% on a PC warning

Intel’s shares dropped 16%, according to the Financial Times, after the chipmaker forecast weaker sales. Its own results filing shows a split picture: data center revenue rose 78% in the third quarter, while PC chip sales fell.

Record data center growth, shrinking PC business

In its Q3 2026 earnings release, filed with the SEC on October 29, Intel reported revenue of $16.5 billion, up 21% from a year earlier. Diluted earnings per share were $0.60 on a GAAP basis and $0.52 non-GAAP. Gross margin was 43.0% GAAP and 44.1% non-GAAP.

By segment, the Data Center and AI unit (DCAI) brought in $7.3 billion, up 78%. The client business, now labeled CCPG (formerly CCG), earned $8.1 billion, down 5%. Intel Foundry reported $6.7 billion, up 58%. Intel Products as a whole made $15.4 billion, up 22%. Gross additions to property, plant and equipment were $4.2 billion in the quarter, against $3.0 billion a year earlier.

CFO David Zinsner called it “our strongest data center revenue growth in 15 years”.

A fourth-quarter outlook that disappoints investors

For Q4 2026, Intel guided to revenue of $15.0 billion to $16.0 billion, below the $16.5 billion it just posted. It expects gross margin of 37.1% GAAP and 38.0% non-GAAP, and earnings per share of $0.10 GAAP and $0.25 non-GAAP. Both margin figures are well below the third quarter’s.

The company also warned about PCs. “Looking ahead, we see the PC slowdown continuing at least through the first half of next year,” Zinsner said. CEO Lip-Bu Tan said demand for Intel’s CPUs “remains robust” and that the “immediate priority is to unlock additional supply” for its Xeon server processors. The release lists industry-wide substrate and memory shortages among its risk factors.

The size of the share drop varies by outlet. The FT’s newsletter says 16%, a later FT report on the same results says 17%, and CNBC’s headline says 20%. The release does not say which of these moves is the final close, and it does not explain the gap between them.

Who feels this split in practice

The numbers show two businesses moving in opposite directions. Server processors are in short supply because of AI-driven demand, which is why Tan’s priority is supply rather than demand. PC chips, which still make up the larger segment at $8.1 billion, are shrinking. A Q4 forecast that sits below the third quarter suggests the PC weakness is outweighing server growth for now, though the release does not break the outlook down by segment.

For businesses buying hardware, the filing’s cited memory and substrate shortages point to tight supply on the server side. For PC makers and buyers, Intel’s own forecast is that the slowdown lasts well into next year.

Intel is not alone in a split reaction to strong numbers. Techmeme, citing Bloomberg, reported that NXP’s Q3 revenue rose 19% to $3.79 billion, yet its shares fell more than 7% after hours on a below-estimate Q4 forecast. Strong AI spending is also lifting the cloud giants: as we reported, Google’s cloud sales doubled to $30.7B, though spending turned its cash flow negative. Server chips from Intel sit at the supply end of that spending.

What the filing does not settle

The release gives no capital spending outlook and does not mention Intel’s 18A process. It does say the company released the 0.9 process design kit for its 14A node in October and is working with ASML on High-NA EUV readiness. The analyst estimates against which investors judged the outlook are not in the filing, so the reasons for the drop come from press coverage rather than from Intel itself. Intel’s figures are the company’s own and have not been independently audited in this report.