Intel plunges 28.6% in worst session since 1974 as revenue forecast misses estimates
Key Facts
Intel shares closed down 28.6% on October 30, their biggest one-day drop since 1974, after the company forecast fourth-quarter revenue below analysts’ average estimate, according to the Associated Press. Intel put revenue for the period at $15 billion to $16 billion, versus an average of $17.07 billion, according to LSEG data cited by Reuters. It also forecast non-GAAP diluted earnings of $0.25 per share. The forecast followed a third quarter in which the company recorded year-over-year revenue growth. But investors focused on the gap between past performance and management’s outlook for the next period.
Intel’s third-quarter revenue was $16.5 billion, up 21% year over year, according to a company filing. Results varied across its main divisions: Data Center and AI revenue rose 78% to $7.3 billion, while Client Computing and Physical AI revenue fell 5% to $8.1 billion. The company said demand for its processors was strong, but supply bottlenecks in substrates, memory and other key components limited its ability to meet demand. It added that client-market trends were likely to worsen in the fourth quarter and continue through 2027. Meanwhile, Chief Financial Officer David Zinsner said the PC market slowdown would continue at least through the first half of next year, while demand for central processing units remained strong.
Intel expects personal-computer chip revenue to fall by roughly the mid-20s percent in the fourth quarter, according to Reuters. This follows a 5% decline in Client Computing revenue to $8.10 billion in the third quarter; that is the division’s figure, not revenue from PC chips alone. The trend reflects pressure on the client business as the company faces supply constraints. Intel said demand for its processors remained strong despite the market slowdown. But shortages of substrates, memory and other components are limiting the conversion of that demand into production and shipments. The company expects client-market pressures to continue and worsen in the fourth quarter.
A shutdown at Intel’s plant in Israel added another production constraint: the CFO said the facility was halted for two weeks after an explosion in October. He said the company had planned to increase output at the plant by the end of the week in which he made his remarks. Zinsner expected a similar impact on revenue and margin in the first quarter, according to Reuters. The move is part of an effort to expand manufacturing capacity as the company tries to respond to demand and overcome production bottlenecks. But the increase in capacity is coinciding with pressure on cash flow. Intel does not expect positive cash flow in 2026.
Zinsner said Intel remained on track for capital spending of $20 billion in 2026 and that spending would rise sharply in 2027. The company had $21.84 billion in cash and cash equivalents at the end of September, compared with $46.32 billion in long-term debt, according to Reuters. These figures put the cost of manufacturing expansion at the center of investors’ attention, alongside the lack of expected positive cash flow this year. The stock’s decline also came amid broader concerns that large investments in artificial intelligence may not generate enough profit and productivity to justify them, according to the Associated Press. An analyst at Hargreaves Lansdown said Intel’s warning gave investors a reason to trim some of their chip-stock positions, adding: "The market is in a sell first, ask questions later mood."
The sell-off spread to chipmakers, with AMD shares down 10.88%, Qualcomm down 11.13%, Nvidia down 4.22% and Micron down 5.30% on October 30, according to market data cited by Reuters. In the broader market, the S&P 500 fell 1.8%, the Nasdaq Composite 2.9% and the Dow Jones Industrial Average 1.1%, according to the Associated Press. The S&P 500 fell to its worst one-day performance since June. Technology stocks declined as questions mounted about the expected returns from artificial-intelligence spending. Fourth-quarter results, along with the trajectory of production and spending through 2027, remain in focus for investors.