Intel plunges 28.6% in worst session since 1974 as quarterly outlook misses estimates by more than $1 billion

Key Facts

Intel shares closed down 28.6% on Friday, October 30, their steepest drop since 1974, after the company’s revenue outlook for next quarter unsettled investors. Reuters said the quarterly revenue forecast came in more than $1 billion below market estimates. At the same time, the company does not expect to generate positive cash flow this year. The drop came despite third-quarter earnings beating expectations, according to a correction to the initial draft. The move highlights a gap between results for the period just ended and management’s outlook for the period ahead, as the company’s operational turnaround faces supply constraints and pressure in the PC market.

Before Friday’s sell-off, EL7 data showed the stock closed at $92.07 on October 29, after ending the October 28 session at $95.53. Both figures refer to regular-session closes, before the results announcement and subsequent extended-hours trading. Reuters had described a 23% after-hours drop on Thursday, a separate move from Friday’s close, when the shares fell 28.6%. The disappointing quarterly outlook came amid broader concerns about weak demand for personal computers. The cost of the artificial intelligence boom also worried investors, according to Reuters.

The pressure extends to a business that represents about half of Intel’s revenue: personal computer chips accounted for nearly half of the company’s third-quarter revenue. Reuters said the business was under pressure from rising memory prices. Memory suppliers have shifted production to high-bandwidth chips used in AI systems, adding pressure to the memory market tied to PCs. This backdrop puts weakness in the PC market alongside the costs of the AI boom among the factors that worried investors. In this climate, Intel’s warning fueled a sell-off in chip stocks, Reuters reported.

Reuters reported that shares of other U.S. chip companies fell between 4% and 12% in the October 30 session. European company ASML fell more than 6%, while Taiwan’s TSMC declined about 2%. The move spread to U.S. stock indexes: the S&P 500 fell 1.8% on Friday, its worst performance since June. The Nasdaq dropped 2.9%, while the Dow lost about 1.1%, according to the Associated Press. An analyst at Hargreaves Lansdown described the market mood as “sell first and ask questions later” and said Intel’s warning gave investors a reason to take some profits in chip stocks.

Concern also spread to Intel’s debt market, where the cost of insuring the company’s debt against default reached a record, according to Reuters. Five-year credit default swaps widened 17.5 basis points to 124.75 points on October 30. The move reflects a higher cost of hedging credit risk associated with the company alongside the stock’s decline. Reuters placed the development within the market’s reaction to the revenue warning and the expectation of no positive cash flow this year. The evidence provided does not include a specific later date for new financial guidance from the company.