This article first appeared on GuruFocus.
Intel (INTC, Financials) shares fell 12% after the company said supply chain constraints limited its ability to meet surging demand for data-center chips used in artificial intelligence systems.
The gap hurts Intel’s recovery after years of falling behind Nvidia and AMD. As data centers use AI accelerators and regular server CPUs, demand has increased, but Intel says supply has not kept pace even while facilities are full.
Intel also cautioned that growing memory chip prices could hurt PC sales, where new Panther Lake CPUs were supposed to help recoup market share. After tightening early in the year, CFO David Zinsner expects memory supply to recover in the second quarter.
Following quarterly profit and revenue projections below analyst estimates, Friday’s selloff occurred. If losses continue, $31 billion in market value might be lost.
Bernstein analysts said Intel misjudged demand, leaving its production capacity unprepared for the server cycle bounce. Despite improving server conditions, Jefferies analysts said the company still struggles to reclaim cloud market share from AMD.
In 2026, investors will see if CEO Lip-Bu Tan’s cost-cutting and restructuring will stabilize the company. Intel’s next earnings statement will be watched for manufacturing recovery and AI industry advancement.