👉 Breaking Down Intel ($INTC)

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Hi everyone,

Intel just put had one of the ugliest mornings in its 55-year history, so naturally it’s time to talk about it!

As a reminder, this specific deep-dive is written by the GRIT team and is not the exclusive work of Head Analyst Austin Hankwitz.

Intel beat on every line it controls this quarter. Revenue came in at $16.5B, up 21%. Non-GAAP EPS printed $0.52 against $0.38 guided. Gross margin hit 44.1%. Data center revenue grew nearly 80% year over year, the fastest in 15 years. Then management guided Q4 to $15.5B at the midpoint and $0.25 of EPS, the Street had $17.1B and $0.43, and the stock lost a quarter of its value before the opening bell.

Read the guide line by line and the miss has a home. Data center grows again in Q4, by mid-teens sequentially. The PC business drops more than 20% as OEMs choke on memory costs and burn down inventory, and a fatal explosion at Fab 28 in Israel takes roughly $300M off the top. The market took a memory-driven PC inventory flush and a one-time fab accident and priced them like AI demand for Intel silicon had cracked. The data says otherwise.

On the implied guide, Q4 is the quarter Intel's data center business out-sells its PC business. A company running a ~$34B data center revenue rate at 42% operating margins just got repriced like a PC cyclical.

The structural story got better this quarter and the cyclical story got worse. The PC weakness is a memory supply problem Intel does not control, and the inventory correction has a stated end date around Q1 or Q2. The Israel hit is a one-time event across two quarters. Around the $60 range, the stock trades below every post-print price target we could find and about 28% below the $95 where Intel sold $20B of stock in August. Could this be a dip worth buying, sized for volatility?

• Why Now👉A Quarter-Sized Hole In A Year-Sized Story

• The Overview👉Two Engines And A Factory

• How Do They Win👉The CPU Is A Bottleneck Again

• Business Units👉The Crossover Quarter

• How Do They Make Money👉Margins Under The Hood

• By The Numbers👉Six Quarters In One Table

• Bonus Deep Dive👉Where The Miss Actually Lives

• Risks👉What Breaks The Thesis

• Wrapping Up👉Buying What The Market Dropped

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Why Now 👉 A Quarter-Sized Hole In A Year-Sized Story

Intel reported after the close on Thursday, October 29. The stock had closed at $92.07. By Friday morning it was indicated near $68.40, down about 26%, and Yahoo Finance flagged that a close below roughly $64.50 would be the worst single day in the company's recorded trading history. Even after the drop the stock is still up around 85% for 2026, from a year-end close in the high $30s. This was a violent round trip inside a very good year.

The guide is what broke it. Q4 revenue of $15.0B to $16.0B compared to LSEG consensus of $17.1B. Non-GAAP EPS of $0.25 compared to $0.43. Non-GAAP gross margin of 38.0% compared to roughly 42.8% expected. On the call, Zinsner said Intel expects the PC unit market to fall about 12% in 2026, with second-half units down more than 20%, and is planning for another 10% decline in 2027. He was blunt that Intel is not optimistic on memory next year. Then he called 2027 an investment year without positive free cash flow.

The sell side flinched in unison. Bank of America and Roth downgraded to Neutral, with targets cut to $100 and $70. Seaport moved to Neutral. Cantor, Jefferies, Piper Sandler, TD Cowen, Susquehanna and JPMorgan all cut targets into the $75 to $90 range. KGI went the other way and upgraded to Outperform at $95, and Evercore held Outperform at $133. The stock had already shed about 23% in October before the print on AI buildout jitters, and Amazon's report the same night dragged the whole Nasdaq lower. That is the profile of a capitulation morning: a beat, a scary guide, a wave of downgrades and a tape that was already leaning short.

The Overview 👉 Two Engines And A Factory

Intel now reports in two halves. Intel Products holds the businesses that sell chips: Client Computing and Physical AI (CCPG), which is PCs and edge, and Data Center and AI (DCAI), which is Xeon server CPUs, custom ASICs and networking silicon. Intel Foundry builds wafers and packages for Products at internal transfer prices and is trying to win outside customers. Q3 Products revenue was $15.4B. Foundry revenue was $6.7B, of which only $411M came from external customers. All Other, mostly Mobileye at $493M, added $692M. Altera was deconsolidated in September 2025.

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