Intel shares plunge 16% on earnings shock and inventory shortage amid AI server boom

[The Financial News, New York City = Reporter Lee Byung-chul]Intel Corporation reported results that fell short of market expectations and issued weak guidance, sending its share price sharply lower. The stock had more than doubled over the past six months on growing turnaround hopes, but the latest earnings release reinforced the view that its recovery is still a work in progress.
On the 23rd local time, Intel shares dropped more than 16% during intraday trading. This decline is likely to be the steepest since August 2024. In contrast, rival Advanced Micro Devices (AMD) gained nearly 4% over the same period.
Intel swung back to a net loss of 333 million dollars in the fourth quarter of last year. The loss was deeper than the market forecast of a 294 million dollar loss. Revenue came in at 13.7 billion dollars, down from 14.3 billion dollars a year earlier.
In particular, Intel stumbled over a supply shortage in the data center server market, where demand has surged due to the spread of artificial intelligence (AI). During its earnings conference call, the company explained that demand for upgrading legacy server lines has increased, but inventories of related products have been depleted and it is rushing to ramp up additional production.
Chief Financial Officer David Zinsner admitted, "We did not manage supply adequately in line with expectations that shipments in the data center business could increase significantly." Chief Executive Officer Lip-Bu Tan also said, "It is disappointing that we have not been able to fully meet market demand," adding, "This will be a multi-year journey that will require time and resolve."
Fourth-quarter revenue in the data center segment rose 9% year-on-year to 4.7 billion dollars, but analysts noted it still fell short of the "sharp rebound" the market had been hoping for. Intel projected a loss of 21 cents per share for the first quarter of 2026 and guided revenue in a range of 11.7 to 12.7 billion dollars.
Market observers say Intel's inventory shortage could hand indirect benefits to competitors. If supply disruptions at Intel in the data center CPU market persist, AMD could have more room to capture additional market share.
Another pillar supporting Intel's recent share-price rally has been expectations for its foundry business. The company is expanding its foundry operations to manufacture chips for external customers, but there is significant concern that profitability will be hard to achieve if securing large clients is delayed. Intel's foundry unit is reported to have posted operating losses of more than 10 billion dollars in 2025.
Recently, rumors circulated that Intel had already secured a major customer, but the company drew a line under the speculation, saying a formal announcement is unlikely in the near term. Tan explained, "The period when customers will begin to finalize their supplier decisions will run from the second half of this year through the first half of 2027."
Intel has long been viewed as lagging behind Nvidia Corporation and AMD in the AI semiconductor race. It also trails TSMC and Samsung Electronics by a wide margin in foundry services. Even so, funding support from investors, including the Federal Government of the United States, and collaboration with Nvidia have fueled optimism and helped drive the stock higher.




pride@fnnews.com Reporter Lee Byung-chul Reporter