Intel’s management revealed during its Q3 2026 earnings call on October 29th that the data center segment has become a core growth driver, with server CPUs experiencing an unprecedented demand that outstrips supply.
Server CPU Shortage Persists, Strong Growth Expected
Intel CFO David Zinsner stated that the company’s internal factory network and external suppliers have been instrumental in boosting server CPU output. Based on current projections, the Data Center and AI Group (DCAI) is now anticipated to generate nearly $10 billion more in revenue for the full year compared to initial expectations. Intel’s leadership foresees the industry remaining in a supply-constrained state through 2027 and 2028. Despite these challenges, the company expects server CPU shipments to increase by over 30% in both 2026 and 2027. Zinsner noted that growth could be even more robust if supply were less of a bottleneck.
The strong performance in the server market contrasts with the PC sector, which showed resilience in the first half of 2026 but has since begun to weaken. Intel forecasts a total market size decline of approximately 12% for the PC market in 2026, with the second half of the year expected to see a drop exceeding 20%.
PC Market Faces Downturn, Long-Term Outlook Stable
A sustained recovery in the PC market is unlikely until memory supply improves and prices normalize. Zinsner projects that the total addressable market (TAM) for PCs will shrink by about 10% by 2027. While the first half of 2027 is expected to show a more significant year-over-year decline, the second half may see some improvement due to a lower baseline. Notwithstanding these short-term fluctuations, Intel maintains its long-term outlook for the PC market remains unchanged.
Intel believes that traditional PCs will play a crucial role in driving the adoption of artificial intelligence applications and enhancing the return on investment for AI infrastructure. This suggests that while the overall market size may contract, the strategic importance of PCs in the evolving tech landscape remains high.
