Intel Cut Chip Capacity At The Worst Possible Time — And Its Stock Paid The Price |
Intel stock lost 17% of its value last Friday, reported the Wall Street Journal.
On the surface, the reason for the drop was Intel’s mixed results for the fourth quarter of 2025. Intel exceeded expectations for revenue and adjusted earnings per share while projecting significantly lower growth for the first quarter of 2026.
The root cause of the disappointing guidance — a reduction in manufacturing capacity ahead of a big increase in demand for Intel’s central processing units — strikes me as a stunningly bad strategic decision.
“We are on a multiyear journey," said Intel CEO Lip-Bu Tan, according to the Journal. "It will take time and resolve,” he added.
I do not see the recent drop in Intel’s stock price as a buying opportunity. Indeed, many analysts are not optimistic. one of them — Bernstein analyst Stacy Rasgon — expects Intel to be struggling for the next decade, according to Yahoo Finance.
I believe stocks go up if a company beats quarterly investor expectations and raises guidance — otherwise they drop.
A mixed report can lead to a bad result. That is what Intel delivered: The company’s Q4 ‘25 — with $13.7 billion in revenue outpacing the consensus view by $300 million, per CNBC — was better than expected and its Q1 '26 guidance — revenue of $12.2 billion fell $350 million short while earnings per share of $0 was worse than the 8 cents per share view, added CNBC.
Intel explained the miss by citing more customer demand than the company’s factories can produce "Our biggest........