Intel Shares Plunge 29%, Their Worst Drop in Over Four Decades

Intel shares tumbled 29% to close at $65.76, the company's biggest one-day decline in more than four decades. The sell-off followed a fourth-quarter outlook that came in well below Wall Street expectations.

Intel guided for revenue of $15 billion to $16 billion, against analyst forecasts of about $17 billion. It also projected adjusted earnings of 25 cents per share, compared with expectations of 43 cents.

Why the outlook disappointed

The weak guidance reflects a slump in the PC market, a shortage of memory chips and rising component prices. Supply chain disruptions and a fire that halted one of the company's factories have also limited its ability to fill customer orders. Intel expects the PC market to stay weak through at least the first half of next year.

The forecast stands in contrast to a solid third quarter. Revenue rose 21% to $16.5 billion, driven by a 78% jump in data center and AI revenue to $7.3 billion. Sales of PC chips, however, fell 5% to $8.1 billion.

A turnaround under pressure

CEO Lip-Bu Tan is leading a recovery plan built on cost cuts and heavier spending on factories and equipment, which is expected to reach $20 billion in 2026. Intel is focusing on boosting data center chip production and persuading outside companies to use its plants for manufacturing, a bid to compete with TSMC.

The company still faces an uphill climb in semiconductors. It has lost market share to AMD in PC and server processors, while Nvidia continues to dominate AI chips. Higher production costs and component shortages now threaten to delay Intel's recovery and keep it from turning into sustained growth, even as demand for data center processors grows.