INTC Stock Heads for Worst Single-Day Drop in Over 2 Years, but CEO Lip-Bu Tan Says AI Agents Could Drive Server CPU Market to $200 Billion

Intel Corp. (NASDAQ:INTC) shares plunged about 25.60% in Friday’s pre-market trading, putting the stock on course for its worst single-day decline in more than two years, even as CEO Lip-Bu Tan predicted artificial intelligence (AI) agents could drive the server CPU market beyond $200 billion.

Intel’s Earnings Beat Overshadowed By Weak Outlook

Intel reported third-quarter revenue of $16.51 billion, up 21%, and adjusted earnings of 52 cents per share, exceeding analysts’ expectations of 40 cents. If this decline holds during Friday’s regular trading session, the stock would be on track for its worst single-day performance in more than two years.

However, Intel forecast fourth-quarter revenue of $15 billion to $16 billion, below Wall Street’s $17.07 billion estimate. Its 25-cent adjusted earnings outlook also disappointed investors. Reuters reported that an explosion at Intel’s Israeli factory could reduce revenue by approximately $600 million over two quarters. Rising memory costs and weakening PC demand added pressure.

Lip-Bu Tan Predicts Fivefold CPU Market Expansion

"The resurgence in demand for CPU is a meaningful tailwind for us along our transformation journey," Tan told analysts during Thursday’s earnings call.

"While GPUs are great at thinking tasks, deterministic CPUs are more efficient at doing tasks," he added, emphasizing energy efficiency as AI agents increasingly execute computational workloads. "By our estimates, server CPU TAM, largely driven by agentic workloads, could increase as much as five times from where it is today, from $40 billion to more than $200 billion over five years. This makes the opportunity for Intel enormous."

Intel also expanded its collaboration with Oracle Corp. (NYSE:ORCL) to support enterprise and agentic AI workloads using Xeon processors.

Analysts Weigh Strong Demand Against Supply Constraints

Futurum Group CEO Daniel Newman argued Intel’s weak guidance "isn’t a demand issue," pointing instead to capacity expansion and product mix.

$INTC had a pretty good quarter this quarter but has some questions to answer on the guide.
Realistically it isn't a demand issue, but more related expanding capacity and perhaps mix shift. https://t.co/nhl9QsUEYy

— Daniel Newman (@danielnewmanUV) October 29, 2026

However, Futurum strategist Shay Boloor warned that production constraints could allow Advanced Micro Devices Inc. (NASDAQ:AMD) and Nvidia Corp. (NASDAQ:NVDA) to capture server CPU customers.

$INTC CEO sees server CPU market growing 5x to over $200B in five years as AI agents take off saying "the ratio of CPU to GPUs used to be 1-to-8 and now it is 1-to-4."

That's effectively twice as many CPUs per GPU as AI agents run more code and tools which could create another… pic.twitter.com/vFli4Macvo

— Shay Boloor (@StockSavvyShay) October 29, 2026

Meanwhile, Seaport Research Partners analyst Jay Goldberg told Reuters on Thursday, following Intel’s third-quarter earnings, "I think we entered earnings season with the market in a pessimistic mood. No result is good enough, and bad results receive extra punishment."

Intel’s data-center business nevertheless delivered its strongest revenue growth in 15 years, according to management. The company must now expand manufacturing capacity to capitalize on Tan’s projected AI opportunity.

Price Action: INTC shares were trading 25.60% lower at $68.50 in pre-market trading on Friday, according to Benzinga Pro data.

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