Flash Heard: The AI Boom Is Both Helping and Harming Intel -- WSJ

By Asa Fitch

Intel's future is all about AI. Today's plunge in its shares is a reminder of how much its past still matters.

Intel became a financial juggernaut by making and selling chips at the heart of personal computers and, later, servers that underpinned the cloud-computing revolution. While it struggled at the outset of the AI boom, shifts in computing demand in recent quarters have played into its hands. Now, though, that same boom is becoming a drag on its traditional business.

Intel's results showed new strengths, with $7.3 billion of revenue in its data center and AI division, higher than analysts forecast. Intel's central processing units are a big factor in inference computing for AI agents, which have been taking off.

But the company's outlook for the current quarter was dismal, about $1.6 billion below projections, because its old PC-chip business is languishing. Its shares dropped more than a quarter this morning.

Despite all the growth in AI, that PC-related business still supplies roughly half of Intel's revenue-$8.1 billion of it in the third quarter. And the PC market isn't looking great.

PC shipments fell about 20% year-over-year in the third quarter, according to International Data Corp. The reason: Computer-memory prices have skyrocketed because of unprecedented memory demand for AI computing. As a result, PC manufacturers are focusing on higher-priced computers, reducing sales volumes.

And sales volumes are what matters most to Intel. The challenges, Chief Executive Lip-Bu Tan said on an analyst call yesterday, would persist "until memory availability and prices begin to normalize."

That may take a while. Intel Chief Financial Officer David Zinsner said the company expected PC unit sales to decline more than 20% in the second half of this year, followed by a 10% decline next year.

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(END) Dow Jones Newswires

October 30, 2026 09:48 ET (13:48 GMT)