AI up 78%, $INTC down 30%: Intel’s moonshot hit an air pocket 🚀

Intel shares plunged nearly 30% on Friday after the chipmaker forecast fourth-quarter revenue of $15 billion to $16 billion, roughly $1.57 billion below Wall Street expectations, erasing more than $100 billion in market value. Reports placed $INTC at $65.15 during the selloff, while another snapshot showed $65.76. The decline approached 30% and, if it closed below about $64.50, would have been Intel’s worst trading day on record, surpassing previous drops of 29.9% in July 1974 and 26.1% in August 2024. Intel began 2026 at $39.38, meaning the stock was still up about 65% even at $67.

The chipmaker’s third-quarter results were strong, with revenue rising 21% year over year to $16.5 billion and adjusted earnings per share reaching $0.52, above Intel’s $0.38 guidance and Wall Street’s $0.40 estimate. Its Data Center and AI division generated $7.3 billion, up 78% year over year, and posted $3 billion in operating profit, equal to 42% of revenue. Fourth-quarter adjusted earnings per share were nevertheless forecast at $0.25 versus Wall Street’s $0.43 estimate, while non-GAAP gross margin was expected to decline from 44.1% to 38%.

Intel’s forecast reflected a sharp contraction in its PC-focused division, which generated $8.1 billion last quarter and is expected to lose more than 20% of its revenue from the third quarter to the fourth. CFO Dave Zinsner said, “We see the PC slowdown continuing at least through the first half of next year.” Analyst Shanaka Anslem explained that “strong server demand runs into manufacturing and packaging constraints. Intel cannot simply turn every extra order into an extra shipment…PC makers face expensive, scarce memory chips and weaker sales. They are reducing inventory. Intel expects its PC-focused division’s revenue to fall more than 20% from the third quarter to the fourth.”

Production constraints were compounded by a fatal explosion at Intel’s Kiryat Gat factory in Israel on October 14. Intel estimated the incident would reduce fourth-quarter revenue by about $300 million, while reports put its total revenue impact at $600 million over two quarters. Even after adding the $300 million quarterly impact, Intel’s forecast remained $1.27 billion below Wall Street expectations. CEO Lip-Bu Tan told investors on Thursday’s call that “rebuilding Intel is going to be a multiyear journey.”

Intel’s setback formed part of a broader technology selloff that erased roughly $2 trillion from the Nasdaq-100’s market value in October as investors challenged the cost of AI spending. Alphabet lost more than $500 billion in market value on Thursday and nearly 13% over the week after reporting $9.1 billion in negative free cash flow and missing expectations in core search advertising. Amazon also reported negative free cash flow of $42.4 billion over the preceding 12 months despite AWS cloud revenue growing 39%, and expects approximately $220 billion in capital expenditure this year with more spending anticipated in 2027. Reddit fell 29% on Friday and more than 36% over the week, while ServiceNow dropped approximately 34% following disappointing earnings and a weaker backlog-growth outlook.

The selloff also unsettled Intel’s credit market, with the cost of insuring its debt against default for five years reaching a record 123.5 basis points on Friday, its biggest one-day move since October 2022. Zinsner described 2027 as an investment year, saying, “Probably not a dynamic where we are going to have positive free cash flow next year,” while expecting at least a 20% return on invested capital from manufacturing-node investments.