Intel stock experienced a significant drop of 17% on Friday. This decline marks the company's worst day since 2024, as it issued disappointing guidance and warned of a supply shortage.
Investors were shocked after the announcement, which overshadowed the company’s recent earnings report.
During a fourth-quarter earnings call, CEO Lip-Bu Tan expressed concerns about production capabilities. He said, "We are on a multiyear journey. It will take time and resolve."
The company will not be able to meet the full demand for its products, and production efficiency is currently below target levels.
For the upcoming first quarter, Intel anticipates revenue between $11.7 billion and $12.7 billion. Additionally, the company expects breakeven adjusted earnings per share.
These figures fell short of LSEG expectations, which predicted earnings of 5 cents per share and revenue of $12.51 billion.
Despite the current challenges, Intel shares have more than doubled in the past year. This surge resulted from optimism surrounding significant investments from the U.S. government, SoftBank, and Nvidia, which were seen as vital for the company's turnaround.
Intel's foundry business, which creates chips for other companies, has struggled compared to its competitors. CFO David Zinsner indicated that Intel expects customers for its next-generation 14A technology to emerge in the second half of 2026. However, analysts at RBC Capital Markets warned that a "meaningful revenue contribution" from these customers might not materialize until late 2028.
Even with the disappointing forecast, Intel did exceed Wall Street's expectations for fourth-quarter earnings and revenue. Analysts at Jefferies expressed caution, stating they do not see a clear path forward for Intel due to further share loss, lack of an AI strategy, and unclear fabrication opportunities.
As Intel navigates these challenges, investors will be looking for clarity on the company’s foundry customers and how they will impact stock momentum. Understanding the trajectory of Intel’s production capabilities will be crucial as it seeks to regain its footing in a competitive market.
