After a hot start to 2026, shares of Intel (INTC 1.05%) plunged on news that the semiconductor company issued weak guidance in its latest earnings report. The stock is still trading up around 19% in 2026 and has more than doubled over the past year, as of this writing.
Let's take a closer look at its earnings report and prospects to see if long-term investors should consider buying this recent dip.
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Looking for a turnaround
For its fourth quarter, Intel once again struggled with both revenue growth and weak gross margins. Its Q4 revenue fell 4% year over year from $14.3 billion to $13.7 billion. Its product revenue edged down 1% to $12.9 billion. Within product revenue, its client computing group (CCG) product revenue dropped 7% year over year to $8.2 billion, while data center and AI (DCAI) product revenue climbed 9% to $4.7 billion.
Its foundry business, meanwhile, saw revenue rise 4% to $4.5 billion. However, the segment continues to post large losses, with an operating loss of $2.5 billion in the quarter and $10.3 billion for the year. Revenue from Intel's other businesses sank 48% year over year to $0.6 billion, largely due to the sale of 51% of its Altera subsidiary.
|
Intel Segment |
Q4 Revenue |
Q4 Revenue Growth (YOY) |
|---|---|---|
|
Product (CCG & DCAI) |
$12.9 billion |
(1%) |
|
CCG |
$8.2 billion |
(7%) |
|
DCAI |
$4.7 billion |
9% |
|
Foundry |
$4.5 billion |
4% |
|
Other (subsidiaries) |
$0.6 billion |
(48%) |
Data source: Intel. YOY = year over year.
Gross margin remained under pressure, dropping by 310 basis points from 39.2% to 36.1%, while adjusted gross margins sank 420 basis points to 37.9%.
Looking ahead, the company projected Q1 revenue to be between $11.7 billion and $12.7 billion with breakeven adjusted EPS. The $12.2 billion revenue midpoint and EPS were below the $0.05 in EPS and $12.5 billion in sales that analysts were expecting, according to LSEG. Adjusted gross margins were projected to remain weak, coming in around 34.5%. The company cited supply constraints for its light forecast.
NASDAQ: INTC
Key Data Points
Is it time to buy the dip?
Despite the post-earnings dip, Intel shares have risen sharply over the past year. The stock is no longer on the deep discount rack, and now it becomes much more about execution.
The company continues to bet big on its struggling foundry business, and said it was seeing strong demand for its 18A technology. Meanwhile, it said it would start spending more in capital expenditure (capex) on its newest 14A technology once it locked in customers. It is expecting customer decisions in the second half and into early 2027. While Intel said it was making progress, there have been some recent reports of the company continuing to experience yield issues, and the business continues to lose money.
Although the company is seeing some momentum in its data center artificial intelligence (AI) business, both its revenue and revenue growth here are still modest compared to competitors. As a show-me stock that has doubled over the last year, Intel has a lot to prove. As such, I'd remain on the sidelines and not buy the dip.
