Morningstar

Intel Earnings: Lowering Fair Value Estimate as PC Winter Has Arrived, Offsetting Healthy AI Growth

Intel doesn’t expect the memory crunch to abate soon.

The Intel logo can be seen at the headquarters of the chip company.
Andrej Sokolow/picture alliance via Getty
Securities in This Article
Intel Corp
(INTC)

Key Morningstar Metrics for Intel

  • Fair Value Estimate
    : $85.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Very High

What We Thought of Intel’s Earnings

Intel INTC reported third-quarter revenue of $16.5 billion, up 21% year over year and above its $16.3 billion guidance midpoint. Intel expects December-quarter revenue of $15.5 billion, up 13% year over year but short of FactSet consensus estimates of $17.3 billion.

Why it matters: Intel gave investors an ugly outlook because weak demand for PC processors (CPUs) and higher memory chip prices are suppressing unit demand. Intel expects PC unit sales to decline 12% in 2026 (down 20% in the second half of 2026) and another 10% in 2027.

  • Despite the focus on AI and Intel’s manufacturing (Foundry) business, its PC business still accounts for 50%-60% of revenue in a normal quarter. Intel doesn’t expect the memory crunch to abate soon (nor do we). Intel forecasts total revenue growth in 2027, but PC softness will stunt it.
  • We remain encouraged with Intel’s server CPU business and agentic AI demand, as its data center segment revenue rose 17% sequentially and 78% year over year. However, Intel remains supply constrained in server CPU manufacturing and substrates, which may cap its near-term upside.

The bottom line: We lower our fair value estimate for no-moat Intel to $85 per sahre from $105 as we cut our near-term PC CPU revenue estimates. Intel’s PC revenue was resilient in the first half of 2026 despite high memory prices, but the slowdown is now arriving and hitting the company aggressively.

  • Shares fell as much as 21% after hours on the soft outlook, and we think the selloff is largely justified. We think shares are modestly undervalued, but we retain our Very High Morningstar Uncertainty Rating and acknowledge a host of risks as Intel remains in turnaround mode.

Coming up: Intel also faced a tragic manufacturing accident in Israel in mid-October that will provide headwinds of $300 million in revenue and 200 basis points to gross margin in the fourth quarter. Similar headwinds may also affect first-quarter results.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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