Guide · Markets
Earnings Guidance: Why the Forecast Moves the Stock
Earnings guidance is a company's own forecast for coming quarters, and a stock often reacts more to it than to the results just reported. Here is how guidance works and how to read it, using Intel's October 2026 outlook that sent the shares down 28.6%.
On the evening of Thursday, October 29, 2026, Intel reported a third quarter that beat expectations: revenue up 21% to $16.5 billion and adjusted earnings of 52 cents a share against about 40 cents forecast. The next day the stock closed down 28.6% at $65.76, its worst session since 1974. The reason was a single slide. Intel guided fourth-quarter revenue to $15 billion to $16 billion, against about $17.07 billion expected, adjusted earnings to 25 cents a share against a 43-cent consensus, and a gross margin of about 38%, down from 44.1%. Investors had just been told what the next quarter would look like, and it was worse than they had priced.
Guidance is the forecast a company gives for its own future results, usually on the earnings call or in the press release. It can cover the next quarter, the full year or both, and it typically includes revenue, a margin, earnings per share and sometimes capital spending or free cash flow. Most companies give a range rather than a single number; a common shorthand is to compare the midpoint with the analyst consensus. Intel's $15.5 billion revenue midpoint was about 9% below the Street, a gap far larger than the usual few percent.
Guidance often moves a stock more than results do because a share price is a bet on the future. Last quarter's numbers are mostly known by the time they are published: analysts have tracked the company's suppliers, customers and industry data for three months. The outlook is new information. A beat on the quarter just ended, followed by a guide below consensus, is known as "beat and lower", and it usually ends with the stock down. The reverse, a miss on the quarter with strong guidance, can send it higher.
Read the explanation as carefully as the numbers. Intel's chief financial officer, David Zinsner, said the PC market slowdown would continue at least through the first half of 2027; management expects PC shipments to shrink about 12% in 2026 and 10% in 2027 as higher memory prices make computers less affordable. Server chips faced a supply limit rather than a demand one, and an explosion at the Kiryat Gat plant in Israel was expected to cost about $300 million of fourth-quarter revenue. Guidance cut by a one-off event is easier for investors to forgive than guidance cut because customers are buying less, and the reasons tell you which one you are looking at.
Not every company plays the same game. Some guide conservatively so they can beat their own forecast, and analysts learn each management team's habits; others, including Apple since the pandemic, avoid formal guidance and describe expected growth in words on the call, which turns every phrase into a data point. A company that withdraws guidance altogether is signalling that it cannot see far enough ahead, and markets usually treat that as bad news. The consensus itself also matters: when the stock has run up, as Intel's had nearly quadrupled from its 2025 close by June, the guidance investors are really comparing against is the higher "whisper number", not the published average.
Before a report, write down three things: the consensus for next quarter's revenue and earnings, the company's own previous guidance, and how the stock has moved in the past month. After the release, compare the guidance midpoint with the consensus, check whether margins are guided up or down, and listen for the reason. Then watch the analysts: within hours of Intel's outlook, Bank of America downgraded the stock to Neutral and cut its target to $100 from $145, and Jefferies called the guidance a "substantial reset". When estimates for the next two quarters fall that fast, the price usually adjusts to them, not to the quarter just reported.