Intel Sinks 29% on Weak Forecast as Nasdaq Slides Over 2%

Intel shares fell about 29% Friday morning after the chipmaker forecast weak holiday-quarter sales, helping pull the Nasdaq Composite down 2.3% by 11:06 a.m. ET, AP reported.

The drop put Intel on track to lose more than $137 billion in market value, Reuters reported. CNBC said the stock was headed for its worst day since 1974.

In its results release, Intel forecast fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings of 25 cents a share. Analysts expected $17.07 billion and 43 cents, according to LSEG data cited by Reuters. The quarter just ended went better: revenue rose 21% to $16.5 billion, and adjusted earnings of 52 cents beat the 40-cent estimate.

Why the forecast mattered more

How it works: a share price is a bet on future profits, so a company's forecast, called guidance, often moves the stock more than the quarter it just reported. Intel's trouble starts with memory. Suppliers have shifted capacity toward the high-bandwidth memory used in AI servers, which raises the cost of building a PC and weighs on demand, Reuters reported.

"We see the PC slowdown continuing at least through the first half of next year," finance chief David Zinsner said in the release. Intel also expects an explosion this month at its plant in Israel, which killed two workers, to cost about $600 million in revenue over two quarters, CNBC reported. Zinsner said Intel does not expect positive cash flow this year.

There is a stronger side to the report. Data center and AI revenue jumped 78% to $7.3 billion, CNBC said, and the stock was up about 150% this year before the results. CEO Lip-Bu Tan said Intel expects to announce "a couple of customers" for its contract chipmaking business over the next two quarters.

The selling spread. AMD fell 9.3% and a broad chip index lost 5.7% in early trading, Reuters reported. Crypto was lower too: bitcoin traded at $77,512 at 12:03 p.m. ET, down 5% over 24 hours, according to CoinGecko.

In our opinion: Wall Street is showing little patience for heavy AI-era spending that doesn't turn into cash soon. More than $137 billion of Intel's value was at stake Friday morning, and the rest of the chip group paid part of that bill. The next real test is whether Tan names those outside foundry customers, because that is where the turnaround case lives.