Intel Stock Dips on Disappointing Guidance—What It Means for Investors

Intel’s stock took a significant tumble after revealing weaker-than-expected guidance in its latest earnings report, despite maintaining gains of around 19% since the start of 2026 and roughly doubling over the past 12 months. While the recent weakness might look like an opportunity, a closer examination of the company’s fundamentals suggests caution may be warranted.

The Earnings Reality: Where Growth Stalled

Intel reported soft results across multiple fronts in its latest quarter. Product revenue inched down just 1% to $12.9 billion, but underneath this modest decline lies a troubling split: its flagship Client Computing Group (CCG) saw revenue plummet 7% to $8.2 billion, while its Data Center and AI (DCAI) segment posted a 9% gain to $4.7 billion. Meanwhile, the foundry business—which Intel is betting its future on—generated $4.5 billion in revenue with a 4% increase.

The real concern, however, sits in the bottom line. Gross margins contracted sharply, dropping 310 basis points from 39.2% to 36.1%, signaling that the company’s ability to retain profits is being squeezed from all sides. Looking ahead, Intel projected Q1 revenue guidance of $11.7 billion to $12.7 billion with breakeven adjusted earnings per share (EPS)—both coming in below analyst expectations of $12.5 billion in sales and $0.05 in EPS. Adjusted gross margins are forecast to remain under pressure at around 34.5%.

The Foundry Gamble: Promise Meets Reality

Intel’s transformation strategy hinges heavily on its foundry business, where it plans to manufacture chips for other companies. The segment showed modest revenue growth of 4% to $4.5 billion, but this masks a glaring problem: the business posted a $2.5 billion operating loss in the quarter alone and $10.3 billion in losses for the full year.

The company insists it’s making progress, citing strong customer interest in its 18A technology and plans to increase capital expenditure on its newer 14A process once it secures customer commitments—expected in the second half of 2026 and into early 2027. However, persistent reports of yield issues continue to plague the operation, and the division remains deeply unprofitable.

The AI Opportunity—But Playing Catch-Up

Intel’s data center AI business is gaining traction, with DCAI revenue climbing 9% year-over-year. Yet compared to competitors who are dominating this high-growth segment, Intel’s contribution remains modest in both absolute terms and growth trajectory. The company has been trying to capitalize on the AI boom, but execution risk remains elevated given its manufacturing challenges.

A Stock That Must Prove Itself

After doubling in value over the past year, Intel has moved far beyond being a deep-discount opportunity. The stock now trades on execution risk—a much higher bar. While the recent dip might tempt value-oriented investors, the combination of margin pressure, ongoing foundry losses, and competitive headwinds in AI suggest this isn’t the time to add positions. The company has much to prove before investors should feel confident buying weakness.

Intel needs to demonstrate it can stabilize margins, bring its foundry business toward profitability, and gain real market share in AI chips. Until those metrics improve meaningfully, the dip represents underlying fundamental concerns rather than a gift-wrapped bargain. Patient investors would be wise to wait for more concrete evidence of a turnaround before catching this falling stock.