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Intel shares fell 23% after hours after CFO Dave Zinsner said there is "probably not a dynamic where we are going to have positive free cash flow next year."
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TSMC already runs the profitable foundry business Intel is still paying to build and counts much less on PCs.
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Intel( NASDAQ:INTC ) beat third-quarter expectations on October 29, 2026. On its evening call, it then warned that 2027 will probably bring no positive free cash flow. Free cash flow is the cash a business has left from operations after it pays for capital spending.
CFO Dave Zinsner said there is "probably not a dynamic where we are going to have positive free cash flow next year." Intel gave no free cash flow figure for 2027.
Shares closed October 29 at $92.07, down 3.62%. After hours, they fell 23.04% to $70.86 as of about 7:59 p.m. ET, a paper loss of roughly $111 billion if the drop holds. The stock was still up 149.51% year to date, although it had lost 20.58% over the prior month.
What Intel Committed To and What It Left Open
Zinsner said 2026 gross capital spending "remains on track to be $20 billion." He said 2027 spending will be "up strongly" but gave no number. Firm equipment purchase orders rose nearly 40% from the prior quarter, so much of that money is already committed.
The spending will ramp up the 18A and Intel 3 manufacturing processes and get 14A ready for 2028 production. Zinsner called 2027 "basically a knothole" that Intel has to get through.
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Intel still plans to pay down debt in 2027 but did not say how. The likely source is the roughly $54 billion of cash and short-term investments, which includes money from a $23 billion equity offering in August.
Read-Through for Intel Shareholders
In the third quarter, revenue rose 21% to $16.5 billion, led by Data Center and AI, which jumped 78% to $7.3 billion. That growth helped lift non-GAAP EPS 126% to $0.52. Adjusted free cash flow reached $1.6 billion, up from $0.9 billion a year earlier, on $5.1 billion of cash from operations.
Fourth-quarter guidance missed expectations. Intel forecast revenue of $15.0 billion to $16.0 billion and EPS of $0.25, while analysts expected about $17.1 billion and 43 cents. Non-GAAP gross margin is forecast to fall to 38.0% from 44.1%.
That guidance includes about $300 million of lost revenue and 200 basis points of lower margin from the shutdown at the Kiryat Gat factory in Israel, where two workers died in an explosion on October 14. Zinsner expects a similar effect in the first quarter of 2027.
Reality Check on Spending Into Falling PC Demand
Intel expects the PC unit market, its total addressable market (TAM), to shrink about 12% in 2026. It projects second-half units down more than 20% and is planning for a roughly 10% decline in 2027. Zinsner said Intel is "not optimistic about next year in terms of memory."
CEO Lip-Bu Tan said he was "disappointed that we were not able to meet strong customer demand in this quarter." Demand for server chips is real, but Intel has to spend cash on new capacity before that capacity generates anything.
The return depends on winning outside foundry customers. Tan said a couple would be "ready to announce" over the following two quarters but did not name any.
Taxpayers also have exposure because in August 2025, Washington took 433.3 million non-voting shares at $20.47 each. If it still holds that block, the stake was worth about $39.9 billion at the close and $30.7 billion after hours, roughly $9.2 billion less.
What Could Change the Outlook for Intel Stock
Shareholders are funding larger spending into a shrinking PC market, with lower margins and no named foundry customer, after a run that already reflected much of the expected success.
Taiwan Semiconductor Manufacturing( NYSE:TSM ) offers a useful comparison for chip manufacturing. It already runs the profitable foundry business Intel is still paying to build, and it counts much less on PCs.
Until that happens, the after-hours price of $70.86 values a plan that has not yet produced cash.
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