AI Demand Impacts Intel's Financials and Shares Fall

Intel increased its revenue by 21 percent in the third quarter to reach $16.5 billion thanks to data center chips, but its shares lost 20 percent of their value after-hours due to an AI-triggered memory chip shortage and forecasts that the fourth quarter would fall below expectations.

Intel increased its revenue by 21 percent in the third quarter to $16.5 billion, driven by intense demand for data center chips used in artificial intelligence services. However, this surge in demand caused shortages in the supply of memory chips used in personal computers, increasing costs for PC manufacturers and causing Intel's computer chip sales to drop by 5 percent to $8.1 billion.

Company executive David Zinsner stated that they saw a noticeable weakening in the market toward the end of August, and that this situation stemmed directly from memory prices. While memory issues are expected to persist, Intel projected fourth-quarter revenue to range between $15 billion and $16 billion, falling short of Wall Street's $17 billion expectation; its gross profit margin is forecast to decline from 43 percent to 37 percent.

Intel, in which the US government acquired approximately a 10 percent stake in August 2025 in exchange for $8.9 billion in federal funding, still sees that share package valued at approximately $32 billion despite the ongoing sell-off. Meanwhile, it was reported that a fire at a factory in Israel caused a production halt lasting about two weeks and resulted in some silicon wafers being scrapped.

Although foundry service revenues increased by 58 percent to $6.7 billion under the leadership of Intel CEO Lip-Bu Tan, revenue from customers outside the product units remained at around $400 million. International Business Strategies analyst Handel Jones argued that the company needs external financial support and higher capital expenditures to catch up with the competition.