Intel Stock Fell 20% After Earnings Despite 78% AI Growth (INTC)

Intel stock fell after earnings

0:00 Intel just told Wall Street its next quarter will be weaker than expected. And the stock fell around 20% after hours from about $92 to the mid-70s. That's even though its AI and data center business grew 78% in a single year. And here's the strange part. Even after that drop, Intel is still worth about double what it was in January. So, was this a crash or a sale? Quick note first, these are after hours prices. So, the stock can open somewhere different in the morning.

0:22 The numbers on screen show the time they were taken. Here's the quarter in plain English.

The quarter: Intel beat on sales and profit

0:25 Intel brought in 16.5 billion, up 21% from a year ago, and a bit more than analysts expected. Profit beat by even more. Adjusted earnings came in at 52 cents a share against about 40 cents expected. If the story ended there, the stock would be up tonight. And it didn't end there.

The guidance miss

0:41 For the next quarter, Intel guided to 15 billion to 16 billion in revenue. Wall Street wanted about 17 billion. And it guided earnings to 25 cents a share when analysts expected about 44 cents. That's not a small miss. That's almost half. Wojak heard 78% AI growth and bought calls before reading the second page. Think about it like a restaurant that just had its best month ever. Then tells you next month the dining room will be half empty because of road construction outside.

1:02 The food is still great, but you only get paid when people show up. So, what's the road construction?

The PC slowdown and margin pressure

1:08 Intel says the PC market is slowing down, and it warned the slowdown could last through the first half of 2027. But, you know, make no mistake, we are not optimistic about next year in terms of memory and TAM. We think TAM will be down 10% on a units basis next year. PCs are still a huge part of Intel's business. So, when fewer laptops and desktops get sold, Intel feels it right away. Margins are getting squeezed, too. Intel expects its adjusted gross margin to fall about six points next quarter to under 40%.

1:35 Gross margin is how much of each sales dollar is left after the cost of making the chip. Fewer cents left over means less profit, even if the sales held up. So, the good news is about AI, and the bad news is about everything else. Now, let's talk about that good news because it's real.

Intel's AI data center business grew 78%

1:50 Intel's data center and AI business brought in over 7 billion dollars this quarter, up 78% from a year ago. That's the part of Intel that sells chips into server rooms running AI. A year ago, people treated Intel like the company missed AI. So the data center is something that we used to have a leadership in that and over the years we lost it. That number says otherwise. Positive Pete looks at 78% and sees a turnaround. Negative Nelly looks at the guidance and sees a company that still lives and dies on PCs.

2:15 They're both looking at the same report.

How Intel got here: U.S. stake, Nvidia, $95 shares

2:18 To get why tonight stinks so much, you have to remember where Intel was. A little over a year ago, it was the punchline of the chip world, losing money and losing ground to everyone. Then in August 2025, the US government took a stake of about 10%, nearly $9 of stock. A month later Nvidia agreed to invest $5 at under $25 a share. And also my good friend Jensen Huang and then he said, "By the way, I'm going to give $5 to you and support and help you."

2:43 And that mean a lot to me. That's how fast the story flipped. This year the AI data center business took off and Intel beat its own guidance quarter after quarter. By July the stock peaked near $150. In August Intel sold $20 of new stock at $95 a share to pay for its factories and CEO Lip-Bu Tan bought about $10 of stock himself, also at $95 a share. Tonight the boss's own purchase is underwater. But here's why the drop was so violent.

Why the drop was so violent

3:07 Intel was up about 150% this year before tonight. When a stock runs that hard, it's priced for good news, priced for perfection and there's no room for a wobble. And it already slid about 20% over the past month, so traders were nervous going in. A weak guide gave them the excuse to hit sell. Chad bought Intel in early January when no one else wanted it. He's not panicking tonight. Zoomer bought it in July near the top after a video told him Intel was back.

3:31 He is very much panicking. Same stock, same night, totally different feeling and the only difference is the price that you paid. And Intel isn't alone. This week ServiceNow and Fortinet both beat earnings and both dropped more than 20% on Thursday because their outlooks didn't match the hype. The market right now is grading on the next quarter, not the last one. A great report with a soft forecast gets punished. Good is not good enough when you're priced for perfect.

Is INTC stock on sale? The $118 target

3:54 So is it a sale? Here's the opportunity case. Before tonight analyst average price target was about $118 according to 24/7 Wall Street. If the stock opens in the mid-70s, that's well over 50% above where it trades. But, be careful with that number. Those targets were set before this guidance, and analysts usually cut targets after a miss like this. Expect some of them to come down this week. A price target is a forecast, not a promise. Now, here's the bear case, and it's serious.

The bear case

4:16 If the PC slowdown lasts all the way through mid-2027, earnings could stay weak for several quarters, and the stock might not deserve the price it ran up to. Intel's manufacturing business also has to prove it can win outside customers. We could have couple of customer are ready to announce announce them next two quarter. That's expensive, it takes years, and it's still a work in progress. And after a 150% year, even a great company can go sideways for a long time while its earnings catch up.

4:42 Zoomer says it's going back to January prices, but he said that about every stock since 2008.

What to watch next

4:49 So, what will tell us which side wins? Here are the signals I'm watching over the next few months. Start with analyst price targets. If most of them only trim a little, Wall Street still believes the AI story. If they slash them, that tells you the mood has turned. Then the data center number. It grew 78% this quarter. If that keeps growing fast while PCs are weak, then the bull case holds up. And the PC market itself, Intel said the slowdown could run through the first half of 2027.

5:11 Watch whether other PC makers say the same thing. If all those point the same way, you'll know a lot more than anyone else does. So, here's how I think about it as a CPA, not as a hype guy.

How I'd think about it as a CPA

5:20 First, separate the quarter from the guidance. The quarter was good, the next quarter looks weak. Next, ask which one you're investing in. If you're here for an AI data center story, that part grew 78%. If you need PCs to bounce back soon, the company just told you not to count on it. Last, look at your entry price. Buying after a 20% drop is different from buying after a 150% run. If you do buy, spreading it over a few months is one way to avoid betting everything on one morning.

5:44 Nobody knows where Intel opens tomorrow. Remember, I'm recording this video in the after-hours prices. One way to read the night, it looks less like Intel breaking and more like a hot stock running into a cold quarter. The AI business is growing fast, the rest needs time. Tell me in the comments, are you buying this dip or are you waiting? YouTube picked this next one for you, and it's better time than Zoomer's entry price.