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Shares of Intel (INTC) fell 28.6% on October 30, 2026, the session after its fiscal Q3 2026 report, while the S&P 500 lost 1.8%. Management forecast fourth-quarter revenue of $15 billion to $16 billion. This falls below the $16.5 billion Intel just reported, and the company expects PC makers to keep working down their inventory. The case for owning Intel has rested on its server chips for data centers, whose growth management said led the quarter. So is that business still growing fast enough to see Intel through a slump in PC chips?

Intel's Data Center Sales Are Growing Fast

So far, yes, though not fast enough to offset the PC slump in Q4. Data center revenue was $7.3 billion in fiscal Q3 2026, up nearly 80% from a year earlier. Management expects it to grow by a mid-teens percent in Q4 from Q3. That is a sharp change from fiscal 2025, when the business grew 4.9% for the whole year.

Profit beat expectations. Adjusted earnings per share were $0.52 against the $0.40 analysts expected, while revenue came in just under the $16.8 billion consensus. Even so, Intel stock fell much further than other chip stocks in the same session: AMD lost 10.9% and Qualcomm dropped 11.1%.

Intel's limit in data centers is supply, not demand. A shortage of a material used to package its chips is limiting its output, management said, and its Q4 10-nanometer server shipments will take a hit. It expects the industry to stay short of supply through 2027 and into 2028.

PC Chip Sales Are Still Shrinking At Intel

The PC slump is not over. Revenue from Intel's PC chip business fell 9% from Q2 to $8.1 billion in fiscal Q3 2026. Management expects a drop of more than 20% from Q3 in Q4 as customers work down their inventory. The decline started earlier. The business brought in $32.2 billion in fiscal 2025, down 3.4% from the year before.

Management blamed higher memory prices and tight IT budgets, and said the inventory correction will last at least into the first quarter of 2027. It expects PC unit sales across the industry to fall roughly 10% in 2027, and said it will have to see in 2028 whether memory supply improves.

Management did point to its products. Revenue from AI PC chips grew 35% from a year earlier, and Nova Lake, its next PC chip, is tracking ahead of schedule. Even so, management said total PC chip revenue declined 5% year over year. That fall was against the same quarter a year earlier, not against Q2.

What You Cannot See In Intel's Forecast

Intel's Q4 revenue forecast includes a hit of roughly $300 million from an incident at its Fab 28 plant. Management expects a similar hit in the first quarter of 2027. Part of the forecast drop, then, comes from one plant rather than from customers.

The forecast also says nothing about cash. Management said Intel probably will not have positive free cash flow in 2027, as it ramps Intel 18A and prepares Intel 14A for production in 2028. It expects capital spending in 2027 to be up strongly from the $20 billion planned for 2026. Intel ended the quarter with $54.0 billion in cash and short-term investments, against $50.1 billion of debt, after a $23 billion share sale in August. Intel will be paying for 2027 out of that cash, which appears to leave less room for data center growth to stall or for the PC slump to run longer.

Intel's data center sales are growing fast, while its PC chip sales are still shrinking. For now, owning Intel is a bet that the first outlasts the second. Against management's forecast of a drop of more than 20%, Intel's PC chip revenue is the number to watch in its fiscal Q4 2026 report, expected in January 2027.

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