Intel drops over 26% premarket on weak Q4 guidance

On October 30, during U.S. pre-market trading, Intel shares plunged 26%. The move came after the company released its third-quarter financial results. Total revenue was $16.51 billion, up 21% year-on-year. Under GAAP, net income was $3.32 billion, down 18%, and diluted earnings per share were $0.60, down 33%. On a Non-GAAP basis, net income was $2.756 billion, up 169%, and EPS were $0.52, ahead of the market's $0.40 estimate.

Even so, the Q3 figures did not calm investor concerns, as the pressure centered on the fourth-quarter outlook. Intel guided Q4 revenue to $15.0 billion to $16.0 billion, with Non-GAAP EPS of only $0.25, far below Wall Street expectations of $17.07 billion in revenue and $0.43 in EPS. An incident at an Intel factory in Israel was also reported as an additional factor weighing on the stock.

The business segments diverged sharply. The Data Center and AI group, DCAI, was the main growth engine, posting Q3 revenue of $7.318 billion, up 78% year-on-year, operating income of $3.039 billion, and a 41.5% operating margin. The Client Computing and Physical AI group, CCPG, remained weak, with revenue of $8.097 billion, down 5%, and a contraction in operating income. As of publication, the situation remains at the stage of a sharp pre-market selloff following guidance that missed expectations.