Shares of Intel crashed today despite the company reporting its underwhelming fourth-quarter results, which also incorporated weak Q1 2026 guidance. While the Q4 2025 beat the expectation of Wall Street, the Q1 2026 guidance fell short of it. The shares fell to 15.6% from their closing price of $54.32 during the market session.
What is the Cause of Raising Concerns?
Addressing the concerns, the CEO, Lip-Bu Tan, revealed that severe supply chain constraints have critically hampered the production yield, preventing the company from meeting surging demands for its AI data center chips. Intel is planning to compete with Taiwan Semiconductor Manufacturing (TSMC), the world’s dominant chip manufacturer. Furthermore, TSMC is well-known for its reliability and manufacturing efficiency, and if Intel can’t match the standards and meet the consistency of TSMC customers won’t switch. Additionally, Lip-Bu Tan observed that foundry customers are just designing chips and not manufacturing them, he saw this as central to Intel’s future growth.
Intel’s Metric Analysis
The consensus among analysts was that the company would report a revenue of $12.55 billion and adjust the earnings per share to $0.05. The company projected Q1 2026 revenue and an adjusted EPS of $11.7 billion to $12.7 billion and $0.00, respectively. Intel posted in Q4 2025 that they had sales of $13.7 billion revenue better than what the analysts had anticipated the company would report. Intel reported it adjusted the EPS to $0.15, thus surpassing the analysts’ expectations of $0.08. In short, the presumed challenges in the first quarter of 2026 will not persist for long. The Chief Financial Officer of Intel, David Zinsner, stated in today’s press release that, “We expect our available supply to be at its lowest level in Q1 before improving in Q2 and beyond.”
The shares of Intel were extremely volatile and have been subject to 41 moves greater than 5% over the last year. While the Street had earlier forecasted meager growth, researchers at HSBC and Seaport argued that the rise of agentic artificial intelligence, autonomous systems that are capable of planning and executing tasks, would facilitate a massive refresh of general-purpose server computers. This idea could effectively quadruple the projected growth rate for server CPU demand, catching bearish investors off guard. The sentiment shift can promote heavy options trading and optimism surrounding the imminent fourth-quarter earnings report.
What the Drop is Signaling Investors
Shares of Intel are currently trading at 904 times the trailing earnings, which is a rich valuation for a well-established company. It would be a wise decision for investors with lengthy investment horizons to consider a position in this tech powerhouse. However, those who are seeking value opportunities can consider a separate investment opportunity, like a tech exchange-traded fund (ETF) that also includes Intel among its holdings.
While Intel dropped, others gained momentum, including the S&P 500, which closed on Friday up 0.03% at 6,915. Among the semiconductor stocks, the industry rivals Advanced Micro Devices closed at $259.68, and NVIDIA closed at $187.68. Hence, investors can reap opportunities from these as well.
