Intel's data centre sales jump 78%, but a soft outlook sinks the stock
Data Center and AI revenue reached $7.3 billion in Q3 2026, yet Intel guided Q4 to $15-16 billion and shares closed at $65.76, down from $92.07 a day earlier.
Intel's Data Center and AI group grew revenue 78% year on year to $7.3 billion in the third quarter of 2026, which CFO David Zinsner called the company's strongest data centre growth in 15 years. Investors ignored it. After the October 29 report, the stock closed Friday at $65.76, down from $92.07, a drop of roughly 29% that TechPowerUp, citing CNBC, called its worst day since the 1970s.
The quarter by the numbers
Total revenue rose 21% to $16.5 billion. The client unit, now called the Client Computing and Physical AI Group, slipped 5% to $8.1 billion, while Intel Foundry climbed 58% to $6.7 billion. Reported gross margin improved to 43.0% from 38.2% a year earlier, adjusted earnings per share more than doubled to $0.52, and operations generated $5.1 billion in cash. On paper, revenue, margin and earnings all beat Intel's own guidance.
Why the market sold anyway
The problem was the forecast. Intel expects fourth-quarter revenue of $15.0 billion to $16.0 billion, a step down from Q3, with adjusted gross margin falling to 38.0% and adjusted earnings per share to $0.25. Part of that comes from the Fab 28 shutdown in Israel, which Intel says will remove about $300 million of Q4 revenue. The bigger driver is the PC business. "We see the PC slowdown continuing at least through the first half of next year," Zinsner said in the release.
CEO Lip-Bu Tan framed Intel's top priority as unlocking more supply for its Xeon server processors. In practice that means the factories are being pointed at servers first, with 18A wafers previously earmarked for Panther Lake laptop chips being reassigned to data centre production.
What it means for gamers
A company making record money from servers and losing ground in PCs has less reason to fight on price for desktop buyers. Client processor shipments fell 14% year on year in the quarter, offset by a 9% rise in average selling prices, so each chip Intel did sell cost more. Desktop shoppers across Southeast Asia buy from the same global supply, so tighter consumer allocation and firmer CPU pricing are the trend to expect into 2027.
What comes next
Intel's next big consumer moment is CES, running January 6 to 9 in Las Vegas, where it has promised details on its Nova Lake desktop chips. Fourth-quarter results follow early in the new year.
Source: TechPowerUp; Intel Q3 2026 earnings release; Tom's Hardware.
