Intel suffers worst stock drop in more than four decades on weak forecast
Intel lost 29% of its market value on Friday, closing at US$65.76 in New York in its steepest one-day fall since records began in 1982, after the chipmaker forecast fourth-quarter revenue well below what analysts expected. The company said sales would be US$15 billion to US$16 billion, against analyst estimates of about US$17 billion, with adjusted profit of 25 cents a share rather than the 43 cents Wall Street had projected.
The cause is a shortage of memory chips that has pushed up the price of laptops and desktops and cut demand for the processors Intel sells to PC makers. Chief executive Lip-Bu Tan said memory pricing "went up a lot" and predicted it would become "a very severe issue to all of us" in 2027. Intel expects the PC downturn to run through at least the first half of 2027, with a 10% decline next year after a 12% slide in 2026.
Supply problems also hit the data centre business, which Tan said would have done better but for shortages of some raw materials and a shutdown at a factory in Israel following a fire. Chief financial officer Dave Zinsner said the closure would cost US$300 million in lost fourth-quarter revenue, with a similar shortfall expected in the first three months of next year. The plant, closed for two weeks, is due to restart within days.
The results show how unevenly the AI boom is reaching Intel. Third-quarter sales rose 21% to US$16.5 billion, with data centre and AI revenue up 78% to US$7.3 billion and foundry sales up 58% to US$6.7 billion, while client division revenue fell 5% to US$8.1 billion. Gross margin was 43% and is projected to narrow to 38% this quarter. Emarketer senior analyst Asa Hiken said the outlook shows "strong demand alone isn't enough to overcome its near-term challenges, particularly ongoing weakness in its traditional PC business".
Intel's shares had more than doubled this year through Thursday as investors bet on it as an AI beneficiary, and Tan has cut jobs and drawn in outside investors including Nvidia and the US government since taking over in March 2025. The company plans capital spending of about US$20 billion in 2026, rising significantly the year after, and Zinsner said it will likely not generate free cash flow in 2027, which he called an "investment year".
