Intel said on Thursday it struggled to satisfy demand for its server chips used in AI data centers, and forecast quarterly revenue and profit below market estimates, sending shares down 13% in after-hours trading. The forecast underscores the difficulties faced by Intel in predicting global chip markets, where the company’s current products are the result of decisions made years ago.
The company, whose shares have risen 40% in the past month, recently launched a long-awaited laptop chip designed to reclaim its lead in personal computers just as a memory chip crunch is expected to depress sales across that industry. Meanwhile, Intel executives said the company was caught off guard by surging demand for server central processors that accompany AI chips. Despite running its factories at capacity, Intel cannot keep up with demand for the chips, leaving profitable data center sales on the table while the new PC chip squeezes its margins.
“In the short term, I’m disappointed that we are not able to fully meet the demand in our markets,” Chief Executive Officer Lip-Bu Tan told analysts on a conference call. The company forecast current-quarter revenue between $11.7 billion and $12.7 billion, compared with analysts’ average estimate of $12.51 billion, according to data compiled by LSEG. It expects adjusted earnings per share to break even in the first quarter, compared with expectations of adjusted earnings of 5 cents per share.
Investors and analysts have hoped that rapid data center buildouts commissioned by large tech companies to advance their AI businesses will drive sales for Intel’s traditional server chips that are used alongside Nvidia’s market-leading graphics processing units (GPU). During the conference call with investors, finance chief David Zinsner said that despite owning its own factories, Intel faces a lag time in changing the types of chips it makes and that the company was not managing its factories with the expectation that data-center demand would change.
