Intel Struggles to Meet AI Data Center Demand, Stock Drops 13%
Intel’s stock plummeted 13% in after-hours trading on Thursday after the chipmaker revealed it cannot satisfy surging demand for server processors used in artificial intelligence data centers. The company issued a disappointing forecast, predicting first-quarter revenue between $11.7 billion and $12.7 billion, below analysts’ expectations of $12.51 billion.
Supply Constraints Limiting Profitability
Despite running its manufacturing facilities at full capacity, Intel lacks the production capability to fulfill customer orders, leaving lucrative data center opportunities unrealized. Chief Executive Officer Lip-Bu Tan acknowledged the shortfall, stating: “In the short term, I’m disappointed that we are not able to fully meet the demand in our markets.” The company expects adjusted earnings per share to break even in Q1, compared to analyst expectations of 5 cents per share.
Finance Chief David Zinsner told Reuters that major cloud-computing companies were unprepared for explosive AI demand and scrambled to upgrade aging chip infrastructure due to “erosion in networking performance.” Intel’s manufacturing challenges stem partly from its inability to rapidly adjust factory operations to accommodate shifting demand patterns, compounding the supply shortage.
New Product Challenges Amid Memory Shortage
Intel recently launched its new “Panther Lake” laptop chip designed to reclaim personal computer market leadership, but weak yields from its advanced 18A manufacturing process are pressuring margins. A global memory chip shortage has elevated PC component costs, further dampening the market.
Despite these challenges, Intel’s stock has surged 84% in 2025, vastly outperforming the semiconductor sector’s 42% gain, buoyed by major investments from Nvidia, SoftBank, and the U.S. government. However, analysts note Intel remains “supply-constrained rather than demand-constrained,” delaying the company’s financial recovery despite competitive products and strong customer interest.