Intel’s fourth-quarter revenue forecast of $15 billion to $16 billion sends shares down 28.6%
Key Facts
Intel shares fell 28.6% at 11:48 a.m. Eastern time on Oct. 30, nearing their worst session since 1974, after the company forecast fourth-quarter revenue of $15 billion to $16 billion, according to an Associated Press update. The range was below the $17.07 billion average analyst estimate, according to LSEG data cited by Reuters. The company also forecast adjusted earnings of 25 cents a share, compared with estimates of 43 cents, Reuters reported. The outlook weighed on the stock even as third-quarter results showed revenue growth and adjusted profit exceeded market estimates. At the same time, the Nasdaq Composite was down 2.5% and the S&P 500 was lower by 1.6%, according to AP.
Intel reported third-quarter revenue of $16.51 billion, up 21% year over year and in line with estimates, Reuters reported. Adjusted earnings per share were 52 cents, above estimates of 40 cents. The figures put the outlook for the coming period at the center of investor attention after a quarter in which adjusted earnings beat expectations.
The guidance gap comes as Intel’s personal-computer chip business accounts for about half of its revenue, Reuters reported. The company forecast that sales in the business would fall by more than 20% quarter over quarter in the fourth quarter, after declining 5% in the September period. Intel said weak demand could persist through the first half of 2027. Reuters noted that rising memory prices, as suppliers shift production capacity to high-bandwidth memory for AI, are increasing the cost of PCs. The company sees that increase weighing on consumer demand, while the PC business remains a large part of its revenue.
On the supply side, Chief Executive Lip-Bu Tan said the company was unable to meet strong customer demand during the quarter amid manufacturing supply shortages, memory pressure and weak PC demand, according to Reuters. Chief Financial Officer David Zinsner said Intel does not expect positive cash flow this year as it expands production capacity. The company plans capital spending of $20 billion in 2026, with spending set to rise sharply in 2027 to secure chipmaking tools, Reuters reported. The manufacturing expansion, alongside weak demand, helps explain the pressure on cash flows. By contrast, the company said the cost of manufacturing its 18A technology, used in Panther Lake chips, has fallen 40% since the first quarter, which could support margins over the longer term.
An explosion at Intel’s plant in Israel affected the company’s outlook: Zinsner said the incident cut fourth-quarter revenue expectations by about $300 million and affected gross margin expectations by about 200 basis points. The company expects a similar impact in the first quarter, according to Reuters. Another agency report said the plant was shut for about two weeks and that lost revenue could reach about $600 million over two quarters. In the semiconductor market, shares of AMD, Arm, Qualcomm, Nvidia, Broadcom and Micron fell by between 2% and 10% during trading on Oct. 30, Reuters reported. The sector’s decline showed that the reaction extended to other chipmakers in the same session.
The decline coincided with broader market concerns about returns on heavy spending on AI data centers. AP said investors are questioning whether the investments will generate enough profit and productivity to justify their cost, amid concerns that high interest rates could slow expansion. In this context, Amazon recorded negative free cash flow of $42.4 billion over the 12 months preceding Sept. 30 and spent $94.8 billion on property and equipment, particularly technology investments tied to AI, according to AP. Amazon’s figures provide background to the market debate over infrastructure costs and returns, while Intel’s cash warning is tied to its manufacturing expansion plan. The company heads into the fourth quarter expecting weak sales of PC chips and an anticipated impact from the plant disruption in Israel. Intel said weak demand could extend through the first half of 2027.