Intel Data Center AI Revenue Rises 78%, Weak Q4 Outlook Sinks Shares
Intel data center AI revenue rose 78% to $7.3B in Q3, but a weak Q4 guide of $15-16B sent shares sharply lower after hours.
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SANTA CLARA / LONDON (BYTEVYTE): Intel's data center and AI revenue rose 78% to $7.3 billion in the third quarter, but a fourth-quarter forecast below Wall Street expectations pushed the chipmaker's shares sharply lower after hours on October 29, 2026. The split matters for buyers and investors: Intel data center AI revenue is the fastest-growing part of the business, while the PC and memory-cost pressures behind the guidance could last into 2027.
Intel reported third-quarter revenue of $16.5 billion, up 21% from a year earlier. Its foundry business grew 58% to $6.7 billion. The data center and AI group, known as DCAI, was the standout segment, and CFO David Zinsner said its data center growth was the strongest in 15 years.
Where the Intel data center AI outlook falls short
Intel expects fourth-quarter revenue of $15 billion to $16 billion, against the roughly $17 billion analysts had modeled. Adjusted earnings per share are guided at 25 cents, while the expected figure cited across coverage ranges from 43 to 45 cents. Adjusted gross margin is guided at about 37% to 38%. On a GAAP basis, the company projects gross margin of 37.1%, down from 43.0% in the third quarter.
Intel points to weakness in its PC chip division, rising memory prices, raw material shortfalls and supply constraints in data center operations as the drivers. Zinsner expects PC market softness to continue through at least the first half of 2027. The company is therefore growing its AI server business while its client chip base shrinks, and the guidance reflects both trends at once.
Share price and dilution
Reports on the after-hours decline vary, with figures between 15.7% and 23%. The diluted share count rose about 17% following a $23 billion stock sale, so per-share results now measure against a larger base. Coverage does not provide competitor data for the quarter, so this article cannot place the 78% DCAI gain against rival AI infrastructure revenue.
For infrastructure buyers, the key signal is supply. Intel names data center supply constraints and memory costs as headwinds for 2027, which suggests server pricing and availability may stay tight even as demand for AI capacity grows. One report estimates the PC chip business could fall about 25% year over year in the fourth quarter, but Intel has not confirmed that figure.
Investors should watch whether DCAI growth holds once supply eases, and whether the PC decline stays contained through the first half of 2027. Intel's next quarterly report will show whether AI server revenue can offset the client slump and rebuild the margin lost in the current guidance.
While we strive for accuracy and rigor, ByteVyte can make mistakes. Readers are advised to verify all information independently and conduct due diligence before making decisions based on this reporting. We accept no liability for errors, omissions, or decisions made in reliance on this content.
Photo by Brecht Corbeel on Unsplash
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