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Intel (INTC) surpassed Q4 revenue and earnings expectations, reporting revenue of $13.7 bln and non-GAAP EPS of $0.15. However, the stock is plummeting following the release as the company’s Q1 guidance missed the mark across the board, projecting lower revenue, EPS, and gross margins than anticipated. With the stock trading at multi-year highs and up 120% since mid-September, INTC was already facing a difficult "priced for perfection" setup ahead of the announcement.

• INTC’s Q1 revenue guidance of $11.7-$12.7 bln (midpoint $12.2 bln) reflects a lower-than-seasonal decline, primarily due to acute supply constraints that are expected to reach their lowest level in Q1.
• Non-GAAP gross margin for Q4 came in at 37.9%, a plunge of 4.2 percentage points yr/yr as the company faces headwinds from an increased mix of outsourced client products and the early ramp-up costs of its 18A manufacturing node.
• The Client Computing Group (CCG) reported Q4 revenue of $8.2 bln, a 4% sequential decline, even as AI PC units grew 16%. Revenue was impacted by a shift toward externally sourced wafers and a focus on high-end products to manage limited internal supply.
• Data Center and AI (DCAI) revenue grew 15% sequentially to $4.7 bln, driven by strong demand for traditional server compute. However, revenue would have been "meaningfully higher" if not for manufacturing constraints on AI-based CPUs.
• Intel Foundry revenue reached $4.5 bln, up 6.4% sequentially, but the segment reported an operating loss of $2.5 bln. The loss was driven by the early ramp of Intel 18A, though EUV wafer revenue now accounts for over 10% of the mix.
• Panther Lake, the first processor built on the Intel 18A node, launched ahead of schedule with three SKUs in Q4. While the initial ramp is dilutive to gross margins, yields are improving by 7% to 8% per month.
• The company noted continued momentum with strategic partners, including closing a $5 bln investment from NVIDIA (NVDA) and maintaining active engagement with external customers for its upcoming 14A node.

Briefing.com Analyst Insight:

INTC’s Q4 beat is overshadowed by a Q1 outlook confirming a costly manufacturing transition. The guidance miss stems from depleted inventory and a manufacturing network at its most constrained point while prioritizing high-demand server chips. This supply friction, plus the margin-dilutive ramp of the 18A node (Panther Lake), created an earnings vacuum for a stock already "priced for perfection" following its recent 120% rally. However, 15% DCAI growth proves INTC is defending its server turf more effectively now during the AI pivot. With supply expected to bottom in Q1, this stumble appears cyclical rather than structural. While Q1 margins are pressured, steady 18A yield improvements and the early Panther Lake launch validate INTC’s technical roadmap. Long-term, the focus shifts to late 2026, when high-volume 18A production and potential foundry commitments from NVDA and/or Apple (AAPL) could fundamentally re-rate the valuation.