Intel's turnaround story just hit a wall. Shares of the embattled chipmaker plunged 14% Friday after the company warned it can't meet customer demand and issued guidance that fell far short of Wall Street expectations. The stock nosedive wipes out weeks of gains built on hopes that Intel could finally compete in the AI chip race, and it signals that the company's manufacturing problems run deeper than investors anticipated.
Intel just delivered a reality check that sent shockwaves through the chip industry. Despite beating Wall Street's fourth-quarter expectations, the company's shares plummeted 14% Friday as CEO Lip-Bu Tan admitted the company can't meet demand for its products and production efficiency remains below target.
The revelation came during Thursday's earnings call with analysts, where Tan delivered a sobering message about the chipmaker's manufacturing challenges. "We are on a multiyear journey," he told investors. "It will take time and resolve." That's not what Wall Street wanted to hear from a company whose stock had more than doubled over the past year on turnaround optimism.
The guidance Intel provided for the first quarter amplified investor concerns. The company expects revenue between $11.7 billion and $12.7 billion with breakeven adjusted earnings per share, falling short of analyst expectations for 5 cents per share and $12.51 billion in revenue according to LSEG data reported by CNBC. That's a significant miss at a time when competitors are posting blowout results riding the AI boom.
The supply shortage Tan described isn't just a temporary hiccup. It points to deeper issues in Intel's foundry business, which has struggled to match the manufacturing prowess of TSMC and Samsung. While those rivals are minting money fabricating chips for AI data centers, Intel's foundry operation remains a drag on the business.
Investors had been counting on Intel's next-generation 14A manufacturing technology to attract major customers and prove the company could compete in advanced chipmaking. CFO David Zinsner told that Intel expects 14A customers to appear in the second half of 2026, but analysts at RBC Capital Markets warned that "meaningful revenue contribution" might not materialize until late 2028. That's a long time to wait for a company that's already years behind in the AI chip race.
