Intel Corporation (INTC.US) plunged after hours! Q4 performance exceeds expectations but guidance disappoints. Manufacturing yield issues hamper recovery pace.

Stock price of Intel Corporation (INTC.US) plummeted after the release of its latest financial report, as CEO Chen Liwu gave a disappointing performance outlook and warned that the chip manufacturer is facing manufacturing issues. As of the time of writing, Intel Corporation's stock dropped more than 12% in after-hours trading on Thursday. According to the financial report, Intel Corporation's fourth-quarter revenue for 2025 decreased by 4.1% year-on-year to $13.7 billion, beating analysts' expectations of $13.4 billion; adjusted earnings per share were $0.15, higher than analysts' expectations of $0.09. By segment, the client computing business had fourth-quarter revenue of $8.2 billion, a 6.6% decrease year-on-year, slightly lower than analysts' average forecast of $8.3 billion; data center business revenue was $4.7 billion, an 8.9% increase year-on-year, higher than analysts' expected $4.4 billion. The foundry business of Intel Corporation achieved revenue of $4.5 billion, a 3.8% increase year-on-year, higher than analysts' expected $4.4 billion. Currently, almost all orders in this segment come from Intel Corporation's own product division, but the company is actively seeking external customers. Intel Corporation expects first-quarter revenue for 2026 to be between $11.7 billion and $12.7 billion, with the midpoint of this range lower than analysts' expected $12.6 billion; adjusted earnings per share are expected to be zero, while analysts had previously expected $0.08. The gross margin for the fourth quarter of last year was 37.9%, a key profitability metric that is expected to further shrink to 34.5% in the first quarter of this year (analysts expected 36.5%). At its peak, Intel Corporation's gross margin was often above 60%. The company, headquartered in Santa Clara, California, still has a long way to go to regain its former glory in the chip industry. Last year, Intel Corporation's annual revenue was $53 billion, approximately $25 billion lower than its peak level in 2021. Intel Corporation's forecast for first-quarter revenue and earnings in 2026 is significantly lower than Wall Street expectations. During a conference call with analysts, Chen Liwu stated that reversing the company's situation will require "time and determination," further depressing the stock price. Manufacturing bottlenecks have hindered Intel Corporation's efforts to recover, disappointing investors who were hoping for a boost from new products. Chen Liwu said, "We are in a multi-year journey." Intel Corporation is currently facing challenges with low manufacturing yields, making it more difficult for the company to meet order demands. The once dominant chip manufacturer has been trying for years to regain its technological advantage and reclaim lost market share, and this setback is undoubtedly another blow. Chen Liwu stated that market demand is "quite strong," and the company is working to resolve manufacturing issues, but he pointed out that Intel Corporation consumed a significant amount of inventory in the fourth quarter, "our yields and production levels did not meet standards, we need to do better in this area." Previously, Intel Corporation was enjoying a surge of optimism on Wall Street. In recent months, investors have been buying into the stock heavily, betting that new products will further improve the company's financial situation. Intel Corporation has also attracted support from heavyweight investors such as the US government, NVIDIA Corporation (NVDA.US), and SoftBank Group. The stock has been the best-performing component of the Philadelphia Semiconductor Index this month and continues to rise on top of an 84% increase in 2025. Matt Bryson, an analyst at Wedbush, said, "The market has had high expectations for a turning point for Intel Corporation, but hearing that yield issues are still tricky is clearly not a good start." Ultimately, Intel Corporation is facing challenges at the execution level. Chen Liwu stated, "Our entire team is highly focused on improving this. Frankly, the problem lies in the need for us to improve our execution." Intel Corporation CFO David Zinsner pointed out that supply in the first quarter will drop to "the trough," with improvement expected in the second quarter and beyond. David Zinsner said that the weakness in the first-quarter guidance is partly due to "the supply necessary to meet seasonal demand not being met," and noted that supply problems will peak in the first quarter. This reveals the core contradiction of Intel Corporation at present - demand is on the rise, while supply is the limiting factor. The company's management stated that supply levels in the first quarter will drop to a low point, gradually improving in the second quarter. This assessment aligns with Morgan Stanley's previous forecast that "capacity constraints are a double-edged sword."