Intel plunges 28.6% after forecasting fourth-quarter revenue of $15 billion to $16 billion
Key Facts
Intel shares fell 28.6% on October 30, marking their steepest decline since 1974, after the company forecast fourth-quarter revenue of $15.0 billion to $16.0 billion, according to data reported by the Associated Press and Reuters. The top end of the range set by the company is more than $1 billion below the average analyst estimate of $17.07 billion, making the financial guidance the focus of investors’ reaction. The decline came even as third-quarter results beat adjusted-profit estimates, contrasting performance in the period just ended with the near-term outlook. Reuters said the pressures include a weak PC market, manufacturing difficulties and high spending to expand production. It added that Intel does not expect positive cash flow this year as it continues to invest in manufacturing capacity.
Intel’s third-quarter revenue, for the period ended September 26, was $16.51 billion, up 21% year over year and in line with estimates, Reuters reported. Adjusted profit was 52 cents a share, above estimates of 40 cents. But the stronger revenue and profit did not offset the impact of weaker fourth-quarter guidance, as even the top end of the forecast range implies a level clearly below the average analyst estimate. The comparison showed the company grew in the quarter just ended while expecting lower revenue in the following period. Market concerns centered on Intel’s ability to meet demand and convert its manufacturing expansion into cash flow.
Reuters linked the company’s challenges to a weak PC market, manufacturing difficulties and the substantial spending required to increase production. It also said higher memory prices pressured the PC chip business as Intel seeks to expand its manufacturing capacity. Chief Financial Officer David Zinsner said the company does not expect positive cash flow during the year as it continues to fund the expansion. These factors show demand and operating-cost pressures coinciding with capital-spending needs. The disappointing outlook therefore came as the company faced rising production and funding requirements.
An explosion at an Intel plant in Israel affected fourth-quarter guidance by about $300 million in revenue and lowered the forecast gross margin by about 200 basis points, Reuters reported, citing Zinsner. The CFO expected a similar revenue impact in the following first quarter. This impact adds to the gap between the company’s revenue range and the average analyst estimate. The expected continuation of the impact into the first quarter means the explosion’s effects extend beyond the period covered by the current guidance. These details came amid the operational pressures accompanying the company’s warning about cash flow.
The decline spread to U.S. semiconductor companies, with shares of AMD, Arm, Qualcomm, Nvidia, Broadcom and Micron falling between 4% and 12% during the October 30 session, Reuters reported. The Associated Press said market concerns included the possibility that the wave of spending on artificial intelligence had pushed technology stock valuations too high. These broader concerns coincided with worries about weakness in the PC market and Intel’s manufacturing difficulties. The Nasdaq 100 closed at 28,266.22 points on October 30, compared with 29,402.51 points the previous day, according to EL7 data. Intel shares had also closed at $92.07 on October 29, before their sharp decline in the following session.
Intel plans to spend $20 billion on capital expenditures in 2026, with spending set to rise sharply in 2027 as it secures more chipmaking equipment, Reuters reported, citing Zinsner. The plan puts production expansion at the center of the company’s direction for next year, while it still expects cash flow to be negative this year. The spending is tied to securing manufacturing equipment and increasing production capacity amid the production and PC-market challenges cited by Reuters. The CFO also expected the plant explosion to continue affecting revenue in the following first quarter. These forecasts combine a higher spending plan with a continuing operational impact and pressure on cash flow.