- Intel warned that growth in AI server chip demand is outpaced by supply, driving a 13 % plunge in its share price.
- CEO Lip-Bu Tan expressed disappointment at shortfalls, as forecasts for Q1 revenue and earnings fell below market expectations.
What happened: Intel shares dropped 13% after the company said it could not meet strong AI data centre demand and issued weaker-than-expected guidance
At the quarterly financial report conference call on 22 January 2026, Intel said that due to the surge in demand for the server central processing unit (CPU), the core component of the AI data center infrastructure, it was difficult for the company to meet, resulting in a sharp drop of about 13% in the share price after hours.
In the performance outlook for the first quarter of 2026, Intel predicted that the revenue would be between us $11.7 billion and US $12.7 billion, and the adjusted earnings per share would reach the break even point, which was lower than analysts’ expectation, causing dramatic market fluctuations.
Because the plant is running at full capacity, executives acknowledge that there is a lag in adjusting production to cope with the surge in demand for data center processors (which work side by side with competitors such as Nvidia’s GPU, which is crucial for AI workload).
Chief executive officer Chen Liwu admitted that he was “disappointed” that Intel could not fully meet the needs of customers in the short term, which highlighted the pressure faced by the company in manufacturing and supply chain operations.
As part of a broader transformation strategy, Intel has been vigorously promoting updated process technologies, including its 18A and the upcoming 14A nodes, but yield challenges and supply constraints continue to put pressure on profit margins and output.
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Why it’s important
The sell-off highlighted the growing disconnect between AI driven infrastructure needs and Intel’s ability to meet those needs. Although super large-scale cloud service providers and enterprise customers compete to expand the capacity of artificial intelligence data centers, Intel cannot meet this demand, which may shake the market’s confidence in its core server CPU business.
For investors, the sell-off exacerbated concerns that Intel’s high-profile recovery – thanks to significant investment from NVIDIA, Softbank and the US government – may still be constrained by supply rather than sustainable growth.
This event also highlighted the broader transformation of the semiconductor industry: the special AI accelerators of competitors such as NVIDIA and AMD are attracting disproportionate attention and revenue, while general CPU manufacturers such as Intel are facing increasing pressure of innovation and large-scale production.
In the long run, whether Intel can reconfigure its factories, improve process yield and keep the supply consistent with the growing demand for artificial intelligence data centers is crucial to restore investor confidence and maintain competitiveness in the increasingly artificial intelligence centric chip market.
