Intel plunges 29% in worst session since 1974 after profit outlook falls short of analysts’ estimates
Key Facts
Intel shares fell about 29% in trading on Friday, October 30, marking their worst daily performance since 1974, after the company issued a profit forecast below analysts’ estimates, according to the Associated Press. The stock had already fallen 23% in extended trading on Thursday, October 29, after the company warned it would burn cash this year, according to Reuters. The shares closed Thursday at $92.07, compared with a $95.53 close the previous day, according to EL7 data. This sequence distinguishes Thursday’s regular-session decline from the sharp sell-off that began after the results were announced. The pressure came amid challenges in the PC market, manufacturing bottlenecks and heavy spending to expand production.
Reuters attributed the decline in extended trading to Intel’s warning of cash burn this year, as the PC market weakened, the company faced manufacturing bottlenecks and it took on substantial spending to expand production capacity. Those factors reveal a gap between the strong demand management says it is seeing and the company’s ability to supply what is needed. CEO Lip-Bu Tan said, "I am disappointed that we were unable to meet strong customer demand this quarter." He added that the company faces "manufacturing supply shortages, an unprecedented memory crisis, and the resulting weakness in PC demand." These pressures linked demand for the company’s products to supply constraints and conditions in the PC market, while the cash-flow warning was a direct focus of investor concerns after the announcement.
The fallout from an explosion in October at Intel’s factory in Israel added to pressure on supply and revenue. The company said the incident would reduce revenue by about $600 million over two quarters and cut supplies of AI server chips to cloud-computing customers. Its financial impact means pressure extending across two quarters, while its operational impact affects products used by cloud-computing companies. This comes alongside the manufacturing supply shortages Tan described as a near-term challenge. It also coincides with the weak PC market and higher memory prices that the CEO cited in explaining pressure on demand.
The sell-off extended beyond Thursday’s after-hours trading to other chipmakers, with shares of Nvidia, Broadcom, AMD, Micron, Qualcomm and Arm falling between 1% and 6%, according to Reuters. In Friday’s session, declines widened across U.S. semiconductor companies, with shares of AMD, Arm, Qualcomm, Nvidia, Broadcom and Micron falling between 4% and 12%. European-listed ASML dropped more than 6%, while Taiwan’s TSMC fell about 2%, according to Reuters. The moves reflected the spread of the impact of Intel’s announcement across a wider sector, with losses varying between extended trading and Friday’s session. In the broader U.S. market, the S&P 500 fell 1.8% on Friday, its worst day since June, while the Nasdaq fell 2.9% and the Dow 1.1%, according to the Associated Press.
Management’s comments put cash flows and capital spending at the forefront of what investors face in the coming period. Chief Financial Officer David Zinsner said Intel does not expect to generate positive cash flow this year, but still targets capital spending of $20 billion in 2026. He added that spending would rise sharply in 2027, without specifying a figure in the reported remarks. This investment path comes as the company warns of manufacturing pressures, a weak PC market and reduced supplies of AI server chips following the explosion at its Israeli factory. The operational picture therefore combines strong demand the company could not meet with cash and spending forecasts that fueled the sell-off at the end of October.