Intel shares fall 28.9% as company forecasts fourth-quarter revenue of $15 billion to $16 billion
Key Facts
Intel shares fell 28.9% on Friday, October 30, nearing their worst daily performance since 1974, according to an Associated Press report. The decline came after the company reported third-quarter results and then forecast fourth-quarter revenue of $15.0 billion to $16.0 billion. The drop reflects investor concerns about slowing growth and pressure in the personal computer market, alongside the spending needed to expand manufacturing capacity. The company had cut its quarterly revenue outlook after an incident at its factory in Israel. Friday's decline followed a 23% drop in after-hours trading on Thursday, according to Reuters.
The fourth-quarter forecast puts revenue below the average analyst estimate of $17.07 billion, while adjusted earnings are expected to be 25 cents a share, compared with estimates of 43 cents, according to LSEG data cited by Reuters. This follows a third quarter that saw year-over-year revenue growth, according to the coverage angle in the evidence, but did not dispel concerns about the coming quarter. Chief Financial Officer David Zinsner told Reuters the company does not expect positive cash flow this year as it expands manufacturing capacity. Intel is targeting capital expenditure of $20 billion in 2026, after raising its forecast from $18 billion in July. It also said spending will increase significantly in 2027, extending the investment burden beyond this year.
Weakness in the PC market remains a direct pressure on the outlook, with Intel expecting revenue from its PC chip segment to fall by more than 20% sequentially in the fourth quarter, after declining 5% in the third quarter. By contrast, management pointed to strong demand for CPU units and the Xeon family, according to the editorial angle specified in the evidence. The contrast between that demand and weakness in the PC market forms the backdrop to the company's performance, as quarterly revenue is expected to decline. Zinsner said the factory incident cut the fourth-quarter revenue outlook by about $300 million and affected the gross margin outlook by about 200 basis points. He added that he expects a similar impact in the first quarter.
Reuters estimated that the incident at the Israeli factory could reduce Intel revenue by about $600 million over the fourth quarter and the first quarter of next year, as supplies of AI server chips to cloud computing customers are affected. The expected loss adds to pressure on the outlook as the company funds manufacturing expansion. Shares had fallen 23% after Thursday's close, following the company's warning about cash burn this year, a weak PC market and spending to increase production. The decline then widened to 28.9% in Friday's session at the time of the Associated Press report. The quarterly forecast range and high capital expenditure remain central to investors' assessment of the recovery path.
Intel's decline came during a session marked by broader pressure on technology stocks: the Nasdaq Composite was down 2% as of 10 a.m. Eastern time on Friday, while the S&P 500 fell 1.1%, according to the Associated Press. The Nasdaq Composite also closed at 26,184.72 points on October 29, according to EL7 data. Alphabet's Class A shares fell 12.6% on Thursday, their worst day since beginning trading more than 20 years ago. Reuters said Alphabet was on track to lose more than $464 billion in market value, accounting for most of the more than $500 billion the Nasdaq-100 stood to lose if declines continued. The Associated Press noted that Alphabet's purchases of property and equipment exceeded $51 billion, while free cash flow declined in the latest quarter.
Amazon's figures offer another example of the scale of investment spending and liquidity pressure in the technology sector, without directly explaining Intel's share move. The Associated Press reported that Amazon posted negative free cash flow of $42.4 billion over the preceding twelve months and spent $94.8 billion on property and equipment, mainly for AI investments. In a broader market where companies and investors are watching the effects of AI spending, Intel's results and outlook came amid a reassessment of the relationship between investment, liquidity and growth. On monetary policy, a Reuters report said U.S. inflation accelerated in September and traders maintained their bets on a rate hike in December after the Federal Reserve left interest rates unchanged on Wednesday. That leaves technology companies facing a backdrop combining investment costs and financing pressure.