Intel reported fourth-quarter revenue of $13.67 billion, matching Street estimates, and non-GAAP EPS of $0.15, surpassing consensus by $0.07. Despite this beat, the shares have retraced by roughly 20% from their early-December highs as investors focused on supply constraints. Data-center product revenue grew 7% sequentially, driven by initial Panther Lake shipments, while client computing group revenue declined 4% as PC demand remained soft. Gross margin improved to 34.8%, up 120 basis points year-over-year, reflecting better utilization in newer fabs.

Management guided first-quarter revenue between $11.7 billion and $12.7 billion, below the consensus of $12.6 billion, and projected flat-to-modest EPS, signaling supply will constrain unit shipments despite strong AI-driven demand. Intel expects wafer shortages in legacy nodes to persist through mid-year, limiting production of both client and data-center chips. Inventory levels remain lean, with days of inventory down to 38 days versus 45 days a year ago, underlining tightness but capping near-term growth.

Intel’s foundry arm produced its first external 18A wafers under limited agreements with Microsoft in 2024 and an unnamed Amazon AI fabric customer, but external revenue remains negligible. CEO Lip-Bu Tan has delayed significant 14A capacity build-out until firm customer commitments arrive, expected in the second half of 2026. Meanwhile, internal demand for Intel 7 and 18A processes has strained capacity, pushing yield improvement initiatives that aim to raise 18A yield from current low-60% levels to 75% by year-end.

The U.S. CHIPS Act has unlocked over $8 billion in grants for Intel’s Ohio and Arizona fabs, accelerating equipment purchases and bolstering capital expenditures, which Intel plans to maintain at $25–27 billion annually through 2027. Concurrently, TSMC’s reported capacity shortfalls in its N3 node—with allocation rates above 95%—have led several hyperscalers to explore Intel’s excess capacity. Management believes these factors could translate into an incremental 5–7% foundry revenue boost in 2027 if major customers sign on.