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Intel shares are falling sharply amid third-quarter results. For a more detailed analysis, we invited Patrick Moorhead, founder, CEO, and chief analyst of Moor Insights & Strategy. Patrick, thank you for being with us . Intel reports higher-than-expected earnings but misses revenue forecast, citing declining PC sales.
What struck you most about this report at first glance? Well, they actually had a pretty good quarter. They met their revenue target and exceeded expectations on almost every other metric, but it's all about the forecast, right? And, you know, the fourth quarter is about $1.5 billion lower than what investors wanted to see .
You mentioned weak PC sales, as expected, but I think—we'll wait for the conference call—maybe there's a shortage of substrates. By the way, problems with PCs and substrates affect everyone. And there were also reports of an incident at one of Intel's factories in Israel. But again, we'll have to wait for official clarification during the call.
The data center sector grew by 15 % in the fourth quarter, which is simply amazing —another record. So, listen, there were a lot of ups and a few downs. You talk about some of these potential difficulties. One of them, of course, is the rapid increase in memory prices that we are seeing. It would be interesting to hear your thoughts on how Intel is handling this and how management can comment on this in a few minutes.
What impact do you see on these memory prices? Yes, I think they will primarily discuss this in the context of the PC market . Because now the PC market has fallen by 15–25%, and supply volumes have decreased significantly. The main reason is the shortage of memory, as well as the doubling or tripling of its prices, which is putting pressure not only on the profits of PC manufacturers , but also on component manufacturers.
The only positive thing about this is that demand has not disappeared. This means that once memory prices stabilize a bit, availability increases , and prices drop, we will see this demand being met. You can't use a 5-year-old PC for another 5 years. This is impossible. So eventually this demand will return.
Patrick, maybe this is a potential positive factor for the company? We see demand for Intel AI processors coming from this company. What do you see in this matter? Are there any positive prospects in this sector for this company? Yes, I mean the data center segment has grown by 75%, and that's thanks to AI, and I believe that's for the long term.
Generative AI, which has only recently become popular, requires a huge number of processors, which previous types of AI did not require. In fact, we are seeing a one-to-one ratio between the CPU and the accelerator or GPU. And in some cases, this even leads to the need to use two processors per accelerator.
So I think we'll see a lot of positives in the future, and even Lip-Boo expects $40-200 billion in new processor demand over 3-5 years. Patrick, we're seeing headlines about potential deals for Intel's foundry business . We see deals with Google, maybe Nvidia, potentially SK Hynix. What do you want to see from some of these landmark deals they sign?
So, first of all, Intel can't announce in advance a deal it's making with anyone, right? And I think the new Intel will not insist on this. But what CEO Lip-Bu Tan said is that if you saw a jump in capital expenditure, we would only do it if there was a real customer. And what we heard last quarter is an increase in capital expenditures for 2027, which indicates to me that there are large customers for wafers as well as packaging.
And 14A, which is their flagship process of the future, just got what's called PDK 0.9, which is essentially a recipe for customers to build these chips, and they've already been received. Additionally, they have a process called 18AP, a variant of 18A that is already in production, which provides higher performance and lower power consumption .
And at a minimum, we'll see a brand new Intel client product that's ahead of schedule, followed by a new server product called Granite Rapids, coming soon in 2027. So a lot of good news on a day when Intel shares fell significantly after the close of trading . Patrick, as you already hinted, the shares are currently trading about 15% lower over- the-counter.
What do you need to hear from management to stop the decline and reassure investors? Yes, I think the first thing is that they can't do anything about the personal computer market. This can affect everyone involved . The underlays are a problem, but I want to know two things. First, and this is something Intel can do , is get back on schedule to get enough substrates for packaging and wafers.
Secondly, let's talk about Israel . True? Again, there were reports of an explosion at one of the foundries. What impact will this have? How long will this last? And which chips were affected? That's what I want to hear. You know, I would also like to hear that on the call. I would like Lip-Bu to add confidence to the foundry.
A little information about what's going well, or an objective idea of what stage they're at with the plates and packaging. Well, investors will certainly be waiting to see what Lip-Bu Tan has to say in a few minutes. Patrick, we always appreciate your time, sir . Thank you for joining us. Thank you for inviting me.
Let's summarize the earnings presented by Ecolab. Shares of memory chip maker SanDisk are rising after the company beat analysts' forecasts in the first quarter and provided a better-than- expected second-quarter outlook. The company also announced an eight-for-one stock split that will take effect on November 19.
Starbucks shares fell slightly as fourth-quarter revenue missed expectations. The coffee giant reported $9.1 billion in sales. The market expected $9.2 billion. This lag is caused by the slowdown in business in China. Meanwhile, Starbucks posted better-than-expected 7.2% growth in online sales, driven by sales in the U.S., where customers spent more at the coffee chain.
Finally, Reddit is also under pressure, despite meeting revenue and profit forecasts. The weaker-than- expected user growth is disappointing the market. The company reported 130.3 million daily active users. This is a 12% year-on-year increase, below the average analyst forecast of 133.5 million.
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