Intel shares fall about 29% after weak fourth-quarter outlook; Alphabet drops 12%
Key Facts
Alphabet shares fell more than 12% on Thursday, October 29, their worst daily performance on record after the company reported third-quarter results, then closed at $279.84 on October 30. The following day, Intel shares fell about 29%, their worst session since 1974, after its earnings outlook came in below analysts’ estimates. Both companies reported strong revenue growth, but investors focused on a slowdown in some of Alphabet’s businesses and on Intel’s ability to meet expectations for the next quarter. Continued heavy spending on AI also raised concerns about when returns and cash flows would materialize. The pressure spread to chip stocks and the Nasdaq as concern mounted over companies’ forward guidance.
Alphabet’s third-quarter revenue was $127.58 billion, up 25% from the same period a year earlier, but below the analysts’ average estimate of $127.97 billion, according to the Associated Press. In its advertising businesses, Google Search and other advertising revenue rose 12% to $63.3 billion, while YouTube advertising revenue increased 9% to $11.2 billion; both increases were below some analysts’ expectations. The pressure on the stock therefore did not reflect a contraction in revenue: it came despite growth, as the company faced questions about the cost of its AI investments. Google Cloud revenue rose 103% to $30.7 billion, and Alphabet said infrastructure and AI solutions were key drivers of the segment’s growth. This highlights a divergence in the company’s results between rapid expansion in cloud and slower growth in search and advertising than some market estimates had anticipated.
Coverage said investors’ concerns about Alphabet included rising AI spending and pressure on cash flow, as the market seeks evidence that the investment will translate into a commensurate return. The company’s chief financial officer said capital expenditure would continue to “increase significantly” in 2027. She added that the company would provide more details during its fourth-quarter earnings call. This guidance puts future spending at the forefront of investors’ focus, alongside cloud revenue growth driven by infrastructure and AI solutions. Alphabet shares had fallen more than 12% on October 29, while EL7 data showed they closed at $279.84 the following day.
Intel reported third-quarter revenue of $16.5 billion, up 21% from $13.7 billion in the comparable quarter of 2025. But the company forecast fourth-quarter revenue of between $15 and $16 billion, compared with the market analysts’ average estimate of $17.07 billion, and projected adjusted earnings per share of 25 cents, against expectations of 43 cents. The shares fell about 29% on Friday, October 30, after the outlook, which the Associated Press described as the stock’s worst day since 1974. The shares closed at $92.07 on October 29, according to EL7 data. The contrast between quarterly revenue growth and a weaker outlook for the coming period reflects the market’s sensitivity to the demand trajectory and the company’s ability to turn investment into profits.
Intel’s chief financial officer said the personal-computer market slowdown could continue “at least through the first half of next year,” while affirming that investment in production capacity and working capital would continue. At the same time, the company plans capital expenditure of $20 billion during 2026, raising its forecast from $18 billion in July, and said spending would increase sharply in 2027. Intel also said it did not expect positive cash flow this year. The company is therefore facing continued weakness in the PC market while expanding capital spending, adding to investor questions about when returns will materialize. The published fourth-quarter outlook showed a gap between expected revenue and earnings and analysts’ estimates.
The sell-off spread to chip stocks on October 30, with Nvidia down 4.2% and AMD down 10.9%, while the broader semiconductor index lost 7.2%. The Nasdaq closed down 2.9%, leaving it 7.8% below the record closing high it set on October 6. An equity analyst said the earlier near-vertical moves higher in AI stocks had made the decline sharp, adding: “When you see moves this near-vertical, the decline is extremely painful.” These moves bring together the effects of company results and individual outlooks, as well as broader concern about the scale of AI spending. Investors’ next focus is on Alphabet’s details about 2027 spending during its fourth-quarter earnings call, and on the trajectory of the PC market and Intel’s spending through 2027.