Intel's AI Ambitions Stumble as Supply Shortages Trigger Stock Plunge

Intel reported fourth-quarter earnings that narrowly exceeded analyst forecasts, but the news did little to calm a market rattled by the company's struggle to meet booming demand for artificial intelligence processors. Revenue for the quarter reached $13.7 billion, a slight decline from the previous year but above the expected $13.3 billion. Earnings per share were $0.15, beating estimates of $0.08. Despite this, Intel's stock price collapsed, falling 15% after the company issued a disappointing forecast for the current quarter.

The sharp decline reflects a core problem: Intel cannot make enough of the server chips needed to power AI systems. While competitors like Nvidia have capitalized on the AI surge, Intel's manufacturing operations have been unable to keep pace. Chief Financial Officer David Zinsner told investors that supply constraints will be most severe this quarter, with relief expected only later in the year.

This admission accompanied a sobering outlook. Intel projected first-quarter revenue between $11.7 billion and $12.7 billion, below Wall Street's consensus, and forecast breaking even on a per-share basis. The company is prioritizing production of its high-margin Xeon processors for data centers over other products, a strategic gamble to capture AI demand that is testing investor patience.

The results present a significant challenge for CEO Pat Gelsinger's comeback plan. His strategy to revitalize U.S.-based chip manufacturing, supported by government subsidies under the CHIPS Act, has yet to translate into the production capacity needed now. After a strong rally over the past year, the stock's dramatic drop signals that manufacturing execution, not long-term vision, is the immediate concern. For a company central to the nation's tech ambitions, the pressure to deliver is intensifying by the day.

Source: Webpronews