Intel’s stock suffered a sharp premarket selloff after the company issued a weaker-than-expected outlook for the first quarter, reigniting doubts about the pace and durability of its long-awaited turnaround. The decline came despite better-than-expected fourth-quarter results, underscoring how sensitive investors remain to forward guidance as the semiconductor cycle, AI demand, and manufacturing execution collide.

Guidance Miss Overshadows Q4 Beat

Intel Corporation said it expects first-quarter revenue of approximately $12.2 billion, below market expectations, while guiding earnings per share to breakeven. The outlook disappointed investors who had begun to price in a smoother recovery trajectory following recent optimism around AI-related demand and product momentum.

Management attributed the softer guidance primarily to supply constraints, noting that customer demand currently exceeds Intel’s near-term manufacturing capacity. While such a dynamic can be interpreted as demand strength, markets focused instead on the implication that Intel cannot fully monetize that demand in the most critical quarter for confidence-building.

Supply Constraints and Margin Pressure

The supply limitations are particularly acute as Intel ramps up advanced manufacturing nodes, including its highly anticipated 18A process. These investments are strategically vital but financially heavy. Gross margins have already come under pressure, declining year over year, as the cost of developing next-generation fabrication technology weighs on profitability.

Beyond fabs, Intel also faces indirect pressure from rising prices for memory and storage components used in PCs and data center servers. Higher system costs risk dampening end-market demand, potentially limiting revenue upside even as AI-driven workloads grow. Management acknowledged that this dynamic could cap revenue opportunities into 2026, adding another layer of uncertainty to near-term forecasts.

Competitive Landscape Remains Intense

Intel’s outlook must also be viewed in the context of relentless competition. Rivals such as Advanced Micro Devices and Arm Holdings continue to gain share in both data center and client computing, while NVIDIA remains dominant in AI acceleration.

Although Intel reported double-digit growth in AI-related businesses during the fourth quarter, investors remain cautious about whether CPUs alone can meaningfully close the performance and ecosystem gap in the most lucrative segments of the AI market.

Manufacturing Ambitions Offer Strategic Upside

Still, the longer-term narrative is not without support. Intel’s manufacturing business has become a renewed focal point for investors, particularly as geopolitical considerations elevate the value of U.S.-based advanced chip production. The launch of Panther Lake chips, built on the 18A process, has helped revive optimism that Intel can regain technological credibility.

Speculation has also intensified around potential foundry customers. Market participants have pointed to the possibility of future manufacturing collaboration with Apple, particularly around upcoming process nodes. While no deal has been confirmed, management has indicated active engagement with external customers, reinforcing the strategic importance of Intel’s foundry roadmap.

Market Psychology and What to Watch Next

The sharp stock reaction highlights a familiar pattern: when expectations rise faster than execution, guidance becomes the market’s ultimate stress test. Intel’s recent rally left little room for disappointment, and the Q1 outlook exposed lingering fragilities beneath the recovery narrative.

Looking ahead, investors will focus on whether supply constraints ease as the year progresses, how quickly margins stabilize, and whether external foundry wins materialize. If Intel can convert demand into delivered revenue while containing costs, confidence may recover. Until then, volatility is likely to remain elevated as the market reassesses how much patience the turnaround still requires.