Is Intel Stock Ready For A Longer PC Slump

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Shares of Intel (INTC) fell 43.3% in the month to November 9, compared with a 3.3% decline for the S&P 500. The stock's worst day followed a forecast from management that sales in the client business, which sells the chips inside PCs, would drop more than 20% from the third quarter. That unit accounted for $32.2 billion of Intel's $52.9 billion in fiscal 2025 revenue. How long does Intel's management expect the PC slump to last?

Intel Is Planning For Fewer PCs Sold In 2027

On the October 29 call, management said it expects industry PC unit sales to fall roughly 10% in 2027, following an expected drop of about 12% in 2026. The company does not expect a sustained recovery until memory chips become easier to get and their prices settle, and management said it is not optimistic about memory in 2027.

PC makers are also using up the chips they already hold rather than buying new ones, management said. Executives expect to feel a lot of this cut in the fourth quarter, and expect it to extend at least into the first quarter of 2027. The slump is already visible: third-quarter client sales fell 9% from the second quarter to $8.1 billion.

Management does expect Intel to gain share in PCs in 2027, but that share would be drawn from a smaller market. A longer slump is therefore not a fringe case for Intel: it is what management is already planning for.

What Is The Slump Costing Intel Now?

For the fourth quarter, management expects Intel's total sales to slip and its margin to fall harder. Management's midpoint revenue guide for that quarter is about $1 billion below the $16.5 billion Intel reported for the third quarter. About $300 million of that comes from an incident at Fab 28, almost all of it in server products. Even with that hit, data center sales are guided to grow by a mid-teens percentage from the third quarter, which offsets part of the client drop.

Intel makes chips in its own factories, and the factories' costs stay fixed when it makes fewer PC chips, so the cost per chip rises. Intel reported a 43.0% gross margin for the third quarter. For the fourth, management guides 37.1%, and said the decline mainly reflects lower revenue against its fixed costs as it starts fewer client wafers. The Fab 28 incident accounts for about two points of the guided margin, management said.

The business that is shrinking also earns less than Intel's data center business. In the third quarter, client operating profit was $2.3 billion, against $3 billion for data center.

How Much Cash Does Intel Have Behind It?

Intel held $54.0 billion of cash and short-term investments on September 26, against $50.1 billion of debt. It can also borrow $15 billion under its new credit lines.

The cash left after capital spending is far smaller: Intel's free cash flow over the past twelve months was $3.77 billion. Management expects gross capital spending of $20 billion in 2026 and said 2027 spending will be up strongly. It also said Intel will probably not have positive free cash flow in 2027. So a longer PC slump would arrive in a year when, by management's own account, Intel's capital spending will probably use up all the cash its operations bring in, or more.

When Will Intel Show How Long The Slump Lasts?

Intel's next report covers the quarter in which management expects to feel a lot of the PC makers' inventory cut. Intel's client sales for the fourth quarter, and whether management still plans for fewer PCs in 2027, are the measures to watch when Intel reports in January 2027.

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