Why Did Intel (INTC) Stock Drop 14%: Weak Forecast Raises Red Flags

Intel Corporation shares tumbled over 12% in premarket trading on Friday, January 23, 2026, extending losses from the previous day’s after-hours session where the stock had already plunged 14% following the chipmaker’s fourth-quarter earnings release. Despite beating Wall Street expectations on both revenue and earnings per share for Q4, investors fled the stock after Intel issued a dismal first-quarter forecast and CEO Lip-Bu Tan warned of persistent manufacturing problems.

The weak guidance and supply shortage concerns overshadowed the quarterly beat, intensifying doubts about Intel’s ability to mount a competitive challenge against AI chip leaders Nvidia and Advanced Micro Devices in the booming artificial intelligence market.

Fourth-Quarter Results Miss the Mark Despite Revenue Beat

Intel reported fourth-quarter revenue of $13.7 billion, surpassing analyst expectations of $13.4 billion, and adjusted earnings per share of 15 cents versus the 8 cents expected. However, the company posted a net loss of $600 million, or 12 cents per diluted share, significantly worse than the year-ago period when Intel reported a net loss of $100 million, or 3 cents per share.

The deeper losses reflected ongoing challenges in the company’s transition to becoming a competitive chip manufacturer while maintaining its traditional processor business.

The company’s Data Center and AI segment showed some resilience, generating $4.7 billion in revenue during the quarter, up 9% on an annual basis. This growth was driven by increased spending on infrastructure for artificial intelligence systems, where Intel’s central processing units are becoming more important.

However, the Client Computing Group, which produces chips for laptops, declined 7% year-over-year to $8.2 billion in sales, reflecting softening demand in the PC market.

Finance chief David Zinsner attributed the company’s challenges to supply shortages caused by soaring demand from data centers. He described these shortages as an industry-wide problem that could extend well into 2026, hampering Intel’s ability to capitalize on the AI boom.

The foundry business, which manufactures chips for other companies, reported $4.5 billion in revenue, though some of that represents internal accounting for producing Intel’s own chips.

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Dismal First-Quarter Guidance and Manufacturing Concerns

The most troubling aspect of Intel’s earnings report was its guidance for the first quarter of 2026. The company projected revenue between $11.7 billion and $12.7 billion with breakeven adjusted earnings per share, falling well short of analyst expectations of 5 cents earnings per share on $12.51 billion in sales.

More alarmingly, Intel indicated it expects to slide to a loss of $0.21 per share for Q1, underscoring the severity of the challenges facing CEO Lip-Bu Tan’s turnaround efforts.

On the earnings call, Tan acknowledged the production difficulties, stating he was “disappointed that we are not able to fully meet the demand in our markets” and that his team was “working tirelessly to drive efficiency and more output from our fabs.”

The CEO emphasized that improving production efficiency, known as yield, was critical to increasing supply of the company’s products. While Tan noted that yields were in line with internal plans, he admitted they were “still below what I want them to be.”

Investors were also disappointed by the lack of key business updates. Intel declined to provide much-anticipated figures on new customers for its chip fabrication division until later in 2026, and there was minimal information about buyers of the firm’s next-generation 14A manufacturing process technology. Some analysts had hoped for announcements of major customers like Apple for the 14A technology.

The company’s stock, which had rallied 147% over the past year thanks to investments from Nvidia, SoftBank, and the U.S. government, closed at $54.32 on January 22 before plummeting to $46.94 in premarket trading on January 23, representing a 13.59% decline.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.