Evercore ISI: Intel third-quarter preview as higher server CPU prices offset weak PC demand

Where does the third-quarter divergence from consensus come from?

Evercore ISI expects Intel to report third-quarter 2026 revenue of $16.959 billion, about 2.5% above the market consensus of $16.537 billion; non-GAAP earnings per share are expected to be $0.41, in line with consensus.
The difference comes mainly from the data center and artificial intelligence business (DCAI): the firm expects revenue of $7.205 billion, 7.7% above consensus and up 15.1% quarter on quarter. Its model assumes server CPU average selling prices rise 15% quarter on quarter, while shipments grow only 1%.
A higher share of premium products among server and client CPUs supports gross margin; however, Panther Lake and Granite Rapids are early in their product cycles and have gross margins below the company average, so a higher share of those products will offset some of the benefit.

Channel checks show server CPU lead times have lengthened from 8 to 12 weeks in the first-quarter 2026 survey to 12 to 16 weeks, with most respondents expecting improvement by the end of the fourth quarter. Demand exceeds supply, and customers tend to buy from vendors with stock available.
Intel management previously said capacity constraints would still prevent it from meeting all demand in the third quarter, and expects supply bottlenecks to begin easing at the end of the third quarter and improve in the fourth. Evercore ISI also believes wafer supply and yields will limit near-term shipment growth.
The firm’s long-term view is that, as AI applications shift from training to agents, more CPUs will be needed per GPU; channel checks indicate that some configurations are already close to 1∶1. If CPU demand rises in the future, Intel will still need to turn capacity expansion into actual supply.

The company expects PC consumption in the second half of 2026 to be below seasonal levels due to rising memory prices and tight supply, with full-year consumption falling by a low-double-digit percentage. The company also plans to shift some client CPU capacity to servers in the near term.
Evercore ISI expects third-quarter client CPU shipments to fall 7% quarter on quarter. Even with average selling prices rising 3%, revenue from the client computing and physical AI business (CCPG) will remain broadly flat from the previous quarter and be 0.8% below market consensus.
The firm observes that since 2017, DRAM price upcycles have typically preceded declines in Intel client shipments by about five quarters; client products account for roughly four-fifths of CCPG revenue, so the firm is more cautious about the business’s subsequent growth.

Evercore ISI says market forecasts for Intel’s earnings over the next 12 months are about 51% below their previous peak, while forecast earnings for many semiconductor companies have surpassed their historical peaks. The firm believes Intel shares have a relatively high probability of rising if third-quarter results and the fourth-quarter outlook are positive.
However, market interest in Intel has already been rising: in the firm’s survey, 26% of the 42 respondents ranked it as their top AI long position ahead of third-quarter earnings, placing it second.
As of 27 October 2026, Intel’s forward 12-month price-to-earnings ratio was approximately 45 times, 18% above the peer median of 38 times; the firm also noted that the valuation multiple had fallen sharply from its June peak. Evercore ISI assigns an Outperform rating and a $133 price target.