Semiconductor Index Falls 7.2% as Nvidia Drops 4.2% and Intel 28.6%
Key Facts
U.S. chip stocks fell on October 30, with the broader semiconductor index down 7.2% and Nvidia shares losing 4.2%, according to a Reuters report published via MarketScreener. The losses followed Intel’s fourth-quarter forecast, which came in below analysts’ estimates and raised questions about whether AI-related spending can generate returns that justify its cost. The index posted a loss of more than 15% in October, placing the sell-off session within a broader monthly decline for the sector. During trading, Nvidia had fallen 5.3% and the index was down 8.7%, before stocks pared some of their losses by the close. Nvidia closed at $203.2488 on October 30, compared with $213.66 on October 29.
Market pressure centered on the guidance issued by Intel, whose revenue outlook for the coming fourth quarter came in below analysts’ consensus. Analysts’ average revenue estimate was $17.08 billion, while the company set a range of $15 billion to $16 billion. For earnings per share, Intel forecast $0.25, against consensus of $0.44. The gap widened concerns about the company’s weak growth at a time when its results and outlook were in focus across the chip sector. Intel shares fell 28.6% in the October 30 session, while an Associated Press report said they lost nearly 29%, their worst day since 1974.
Concerns extended to the personal computer market, as Intel said demand had slowed and weakness could persist into the following year. Chief Financial Officer David Zinsner gave a nearer-term horizon for the slowdown, saying the company expected it to continue "at least through the first half of next year." Reuters added that higher memory prices had raised computer costs and weighed on demand, as suppliers shifted production toward high-bandwidth memory chips used in AI systems. This means a boom in demand for AI system components is coinciding with pressure in the traditional computer market on which Intel depends. That picture added to concerns about the company’s ability to balance demand across its different markets.
Intel also faced an operational impact from an explosion at its plant in Israel in October. The company told Reuters the incident would reduce revenue by about $600 million over two quarters and cut supplies of AI server chips to cloud computing customers. In its guidance details, Intel cut its fourth-quarter revenue forecast by about $300 million and lowered its gross margin forecast by about 200 basis points because of the plant’s impact in Kiryat Gat. Zinsner said the company expected a similar impact in the first quarter. This combines weak personal computer demand with reduced available production of server chips, as investors monitor growth prospects for the company’s AI business.
Chip losses coincided with a broader decline in U.S. stocks. The Nasdaq Composite fell 2.9% on October 30, leaving it 7.8% below its record closing high reached on October 6, according to Reuters. The S&P 500 also dropped 1.8%, its worst day since June, and closed at 7,580.07 points. The Nasdaq closed at 25,437.00 points. In the sector, shares of Nvidia, Broadcom, AMD, Micron, Qualcomm and Arm fell between 1% and 6% in extended trading after Intel’s announcement, showing that the reaction was not limited to the company that issued the guidance.
Analysts linked the sell-off to questions about the financial returns from AI investments and when they might materialize. Oliver Pursche, senior vice president at Wealthspire Advisors, said investors were asking "whether there will be a positive return on investment, and if so, how long it will take." In a separate comment, an analyst at Cetera pointed to questions about whether AI returns "will justify the expenses." The questions came amid broad spending on AI infrastructure, while Intel’s results and outlook highlight demand, cost and supply challenges across parts of the chip supply chain. The company’s first-quarter outlook, including the expected similar impact at the Kiryat Gat plant, remains the next timeline management has identified for this operational pressure.