Intel reported fourth-quarter revenue of $13.7 billion, a 4% year-over-year decline, while non-GAAP earnings per share of $0.15 topped analyst forecasts of $0.08. Strength in the Data Center and AI division, which generated $4.7 billion in sales (versus $4.4 billion expected), was offset by a slowdown in the Client Computing Group, where PC chip demand weakened.

Management guided first-quarter revenue between $11.7 billion and $12.7 billion, below the $12.5 billion consensus midpoint, and forecast break-even adjusted earnings per share. Intel cited manufacturing capacity shortfalls and component shortages that will persist through the quarter, prompting the 17% share price drop on January 23.

Intel’s foundry business continues to lose ground to Taiwan Semiconductor Manufacturing, with capacity being underutilized due to fab yield challenges. CEO Lip-Bu Tan highlighted that wafer yield rates remain below internal targets and that improving output efficiency is a top priority for 2026. Ongoing execution missteps in the supply chain raise questions about Intel’s ability to capture external foundry customers.

Despite the near-term headwinds, Intel’s leadership maintains that supply constraints should ease in the second quarter, and the data-center recovery will support future growth. However, after a 150% rally over five months priced in a successful turnaround, investors face a pivotal test of execution. Analysts’ mean price targets imply limited upside from current levels, suggesting a cautious stance until tangible improvements in production and order backlogs materialize.