Intel Stock Suffers Brutal Selloff After Painful Warning for Next Quarter

What happened

Intel's next-quarter forecast put pressure on its recovery story. The company expects fourth-quarter revenue of $15 billion to $16 billion, below Wall Street's $17.05 billion estimate. Its adjusted earnings forecast of 25 cents per share also trails the 43-cent consensus.

Confirmed

Global impact / market context

A weaker outlook means Intel expects less revenue and a lower adjusted gross margin of 38%, which is profit left after product costs, versus analysts' 42.8% estimate. That gap threatens the recovery story even as third-quarter adjusted profit beat expectations.

Analyst inference

The 17% early drop shows investors judging Intel on forward guidance rather than past results. Third-quarter revenue rose 21% to $16.51 billion and data center sales jumped 78%, but the fourth-quarter revenue and earnings shortfall against estimates weighed on shares.

Analyst inference

What to watch

1. Watch whether Intel's fourth-quarter revenue lands within its $15 billion to $16 billion forecast range and whether adjusted earnings per share reach the 25-cent guidance. Confirmed
2. Watch whether the company gives any update on plans to improve its adjusted gross margin toward the 42.8% analysts had expected, since that gap drove the warning. Proposed
3. Watch data center and foundry revenue growth against the declining Client Computing segment, because the mix shift affects total revenue and costs. Analyst inference

Evidence

• gurufocus.com