Markets
Intel Fell 28.6%, Its Worst Day Since 1974
Intel shares fell 28.6% to $65.76 on Friday, their worst day since 1974, after fourth-quarter guidance far below estimates. Data-center chip sales grew 78%, but the PC business is heading into a slump.
Intel's third quarter beat expectations on Thursday evening; its forecast for the fourth did the damage on Friday. The shares closed at $65.76 on October 30, down 28.6% from $92.07, the steepest one-day fall since 1974, the Associated Press reported. Calcalist estimated that a decline of that size erases about $120 billion of market value. Even so, the stock still ended the day about 78% above its 2025 close of $36.90, a measure of how far this year's rally had run: at its closing peak of $140.94 on June 22 it had almost quadrupled.
The quarter itself was not the problem. Revenue rose 21% to $16.5 billion, broadly in line with forecasts, and adjusted earnings of 52 cents a share compared with about 40 cents expected and 23 cents a year earlier. Revenue in Data Center and AI jumped 78% from a year earlier to $7.3 billion, its strongest growth in 15 years according to Calcalist, while the client computing business, still the larger of the two, brought in $8.1 billion. The gross margin was 44.1%.
Then came the outlook. Intel guided fourth-quarter revenue to $15 billion to $16 billion, against about $17.07 billion expected, adjusted earnings to 25 cents a share against 43 cents, and a gross margin of about 38%. Chief financial officer David Zinsner said the company sees the PC market slowdown continuing at least through the first half of next year; management expects PC shipments to shrink about 12% in 2026 and 10% in 2027, as higher memory prices make computers less affordable and manufacturers cut inventory. On the server side the constraint is supply, not demand: shortages of advanced packaging substrates and Intel 3 capacity will limit output through mid-2027, and an explosion at the Kiryat Gat plant in Israel in October, which killed two workers, is expected to cost about $300 million of revenue in the fourth quarter and a similar amount in the first.
Analysts rewrote their numbers within hours. Bank of America downgraded the stock to Neutral from Buy and cut its price target to $100 from $145; Jefferies, at Hold, lowered its target to $85 and called the December-quarter guidance a "substantial reset"; JPMorgan trimmed its target to $80 from $85. The selling spread across the sector: AMD fell 10.9%, Qualcomm 11.1% and Nvidia 4.2%.
What makes the day unusual is that Intel's turnaround story mostly held up. Yields on the 18A process are improving faster than the company planned, manufacturing costs are down about 40% since the first quarter and custom silicon revenue more than doubled. But a stock that had nearly quadrupled in six months was priced for that progress to show up in the numbers right away, and the guidance says the next two quarters will be shaped by a shrinking PC market and factories that cannot yet build enough server chips. Investors who bought the recovery are now being asked to wait through a down cycle in the business that still pays most of the bills.