Intel shares fell after the chipmaker topped fourth-quarter expectations but issued a cautious outlook, highlighting capacity constraints and margin pressure in the near term.
BNN Bloomberg spoke with Matthew Bryson, managing director of equity research at Wedbush, about Intel’s production limits, the timing of margin recovery and how artificial intelligence demand factors into the longer-term outlook.
Key Takeaways
- Intel’s first-quarter guidance disappointed investors as capacity constraints weighed on revenue and gross margins.
- The company is struggling to meet strong server compute demand, having already drawn down available inventory.
- Any meaningful benefit from advanced packaging or newer manufacturing nodes is unlikely to materialize before 2027.
- While artificial intelligence is boosting demand for traditional compute, Intel remains a distant competitor in AI accelerators.
- Sustained gross margin improvement from new PC and server products would be required to support a more bullish view on the stock.
Read the full transcript below:
ANDREW: Now, Intel beat in its fourth quarter, but shares are under pressure after the company provided an outlook that disappointed some investors. We’re joined by Matthew Bryson, managing director covering semiconductor and hardware research at Wedbush. Thanks very much indeed.
MATTHEW: Thanks so much for having me.
ANDREW: You have a neutral rating on the stock. You say we didn’t hear that much new from Intel, but tell us, what were the main new points the company produced?
MATTHEW: Yeah, so Intel, last quarter, told us that they were going to be more constrained in Q1, that they just weren’t going to be able to ship out of inventory. So revenues were going to be down. When revenues go down, that has an impact on gross margins, and that’s what played out. If there was anything new, it was really, in my mind, that there’s this opportunity in advanced packaging that might come about in 2027. It might be more meaningful than had previously been thought. But I think they told you pretty much what they said they were going to tell you last quarter.
ANDREW: So it sounds like they just can’t keep up with orders. Is that right?
MATTHEW: Yeah, no. So that’s their problem. They don’t have enough capacity. In particular, you’re seeing a ton of demand from large customers for server compute, and Intel can’t produce enough chips. They’ve been shipping out of inventory, so satisfying customer demand with already produced product, and they just don’t have any more.
ANDREW: And who makes the product that they sell? Is it manufactured by Taiwan Semi or somebody?
MATTHEW: No, in Intel’s case, it’s coming out of their own fabs on the server side for the most part. So they are constrained by their own manufacturing capacity.
ANDREW: Now your thesis, I think, if I’ve got it right, is we’ve seen disappointment today because Intel had this big run-up prior to these numbers. Maybe we can put up a one-year chart again.
MATTHEW: I mean, that’s exactly it. So I think there was this hope that as Intel gets 18A up — so they start running chips in their own facilities, and instead of having to buy as much content from TSM — that as that node becomes more competitive with what’s out there from TSM, you start seeing margins on those new products begin to look like old Intel margins, when they were doing 60, even 70 per cent gross margins on some products. And I think it’s just too early.
ANDREW: Obviously, the perception has been that they’re at risk of becoming an also-ran in the AI chip market. What are your thoughts on that?
MATTHEW: I think they are already an also-ran. Now, having said that, when you look at what AI is going to drive, it’s driving more demand for traditional compute. So they still benefit there. That’s, in fact, why they have a shortage of server compute right now. And at the device level, it drives demand for more intelligent PCs, smartphones, what have you. And I think they have opportunities there. So I think they benefit from AI, but for them to actually be a player in terms of supporting AI — competing with the likes of Nvidia — that’s going to take a whole lot of development work, and we’re a long way away from anything happening on that kind of product set.
ANDREW: What would make you fall in love with Intel stock or get you switching to a buy?
MATTHEW: It’s really seeing gross margin improvement and competitive improvement with their new sets of products. Panther Lake is their first product out on the PC side, but some of the new server products as well. Seeing a continued trajectory higher in gross margins would suggest that, yes, they’re finally catching back up to TSM. But we’re at the start of the journey, and you just can’t see it in the numbers yet.
ANDREW: Matthew, thank you very much. Really appreciate it. Matthew Bryson, managing director covering semiconductor and hardware research at Wedbush.
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This BNN Bloomberg summary and transcript of the Jan. 23, 2026 interview with Matthew Bryson are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
