Intel Data Center Revenue Jumps 78% as PC Slump Sinks Stock
Intel’s fiscal 2026 third-quarter results, reported on October 31, painted a sharply divided picture of the chipmaker. Total revenue reached $16.513 billion, up 21% year-over-year, while adjusted earnings per share came in at $0.52, ahead of market expectations. The Data Center and AI group was the standout performer, with revenue climbing 78% year-over-year to $7.318 billion — the segment’s strongest growth rate in 15 years, driven by demand for Xeon server processors. Meanwhile, Client Computing and Physical AI revenue totaled $8.1 billion, down 5% year-over-year, reflecting clear weakness in the PC market.
What rattled investors was not the quarter itself but the outlook for the fourth quarter. Intel guided Q4 revenue to a range of $15 billion to $16 billion, below the roughly $17 billion consensus. Adjusted earnings per share for the quarter is forecast at just $0.25, far short of the approximately $0.43 analysts expected. Non-GAAP gross margin is projected to fall to 38% from 44.1% in the third quarter. Management pointed to the PC market slowdown and near-term supply issues as the main pressures behind the weaker guidance.
Intel’s management expects the PC market slowdown to persist at least through the first half of 2027. The company projects PC shipments to decline about 12% this year, with a further drop of roughly 10% possible next year. On top of that, an accident at an Intel facility in Israel halted production for about two weeks, a disruption expected to reduce Q4 revenue by approximately $300 million and add further strain on gross margins, compounding the already soft demand picture.
Even with AI server demand running strong, Intel is constrained by capacity, substrate, and memory supply limitations that prevent it from converting all of its orders. Following the earnings release, investment banks including JPMorgan and Jefferies cut their price targets on the stock. Editorially, the split performance makes Intel a company worth watching through 2027 — its recovery now rides heavily on data center momentum while PC weakness keeps dragging on the other side of the business.
