Performance guidance falls far short of expectations Intel (INTC.US) plummeted 29%, the biggest one-day decline since the 70s

The Zhitong Finance App learned that Intel (INTC.US) stock price plummeted 29% on Friday, the biggest one-day decline since the 1970s. Previously, the fourth quarter results guidance announced by the company fell far short of market expectations, mainly hampered by the Israeli chip factory accident and continued weakness in the personal computer (PC) market. This news has severely damaged investors' confidence in Intel's business recovery, and once again severely tested the company's transformation plans promoted by CEO Chen Liwu.

According to the earnings report released by Intel after the market on Thursday, the company expects fourth-quarter revenue of 15 billion to 16 billion US dollars, and adjusted earnings per share of 0.25 US dollars, all significantly lower than market expectations. According to LSEG data, analysts had anticipated Intel's fourth-quarter revenue of US$17.1 billion, with adjusted earnings per share of $0.43.

Intel's chief financial officer David Zinsner said the PC market slump is expected to continue until at least the first half of 2027. “We believe the PC market's slowdown will continue until at least the first half of next year.” Zinsner said the company will continue to invest prudently in production capacity and working capital to expand supply and support future growth.

Weak demand in the PC market is closely related to rising costs of components such as memory chips. According to data from market research agency Counterpoint Research, global PC shipments fell 4% year on year in the second quarter of 2026, reflecting that cost pressure is suppressing demand in the terminal market.

In addition to weak industry demand, an explosion occurred at Intel's chip manufacturing plant in Israel earlier this month, further impacting the company's production and delivery capacity. As a result of the accident, two employees died, another employee was seriously injured, and the factory stopped production for a long time, affecting the shipment of Intel's 10nm chips.

Chen Liwu called it “an unfortunate and sad accident” during the earnings conference call and said that the factory had been shut down for a long time, which had an obvious impact on product supply. Zinsner predicts that the accident will cause Intel to lose approximately $600 million in revenue over two quarters.

The stock price rose 150% during the year, and Wall Street questioned Intel's recovery prospects

This sharp decline is particularly heavy for Intel, as the stock's cumulative increase since this year had reached about 150% prior to the announcement of earnings reports.

Previously, the market had high hopes for Intel's recovery prospects, partly because with the rapid development of smart AI applications, the importance of central processing units (CPUs) has received renewed attention, driving up market demand for related products. However, the latest performance guidelines show that Intel is still facing obvious business challenges, particularly weak PC business and uncertainty in manufacturing.

Analysts D.A. Davidson downgraded Intel's stock rating from “buy” to “neutral” on Friday and expressed concerns about the company's recovery process. Analysts said that although they understand that the PC market is facing pressure at the entire industry level, considering the extent to which Intel's business is weak, it is still difficult to obtain a reasonable explanation for the current valuation level.

The sharp drop in Intel's stock price also caused the US government and Nvidia (NVDA.US)'s previous investment in the company to be drastically reduced. The Trump administration pushed the US government to acquire 10% of Intel's shares last year to support the development of advanced chip manufacturing in the US. Although the investment is currently still profitable, the sharp drop in Intel's stock price on Friday reduced the market value of US government holdings by about $12 billion.

Meanwhile, Nvidia previously spent 5 billion US dollars to invest in Intel, and the market value of its stock holdings also shrunk by about 6 billion US dollars on Friday.

The foundry business is still the key to transformation, and advanced manufacturing processes have yet to win external customers

For Chen Liwu, who became CEO in March 2025, Intel's current performance falling short of expectations is certainly a major setback. Since taking office, Chen Liwu has been working to promote the recovery of the company's business, hoping to help Intel make up for lost development opportunities in the early days of the artificial intelligence wave. Among them, the foundry business is seen as an important part of Intel's transformation strategy.

Intel is the only company in the US with advanced logic chip manufacturing capabilities. It has now achieved large-scale mass production of the most advanced 18A process chips at its new plant in Arizona, hoping to use this to provide customers with advanced chip manufacturing options other than TSM.US.

The company's next fab in Arizona is expected to be in operation by the end of 2028. However, despite progress in advanced manufacturing processes, Intel has yet to secure external customers for its next-generation chip manufacturing business, and there is still uncertainty about the commercialization prospects of the foundry business.

Chen Liwu said during the earnings conference call that the company expects several customers to be ready to announce cooperation news in the next two quarters, while Intel is making “huge progress” in next-generation 14A process technology.

The wave of tech sell-offs spread, and the NASDAQ fell nearly 3%

At a time when Intel's stock price plummeted, the US technology sector was experiencing a round of widespread sell-off. The Nasdaq Composite Index fell 2.9% on Friday, putting an end to a week of poor earnings performance for tech giants. Earlier, the stock price of Google's parent company Alphabet (GOOGL.US) plummeted by more than 12% on Thursday, the biggest one-day decline since the company went public, and continued to fall on Friday.

Amazon (AMZN.US) also fell 1.4% on Friday. The company's previously announced third-quarter revenue and profit fell short of market expectations, while maintaining the 2026 capital expenditure forecast of US$220 billion.

Notably, Amazon has experienced negative free cash flow for the second consecutive quarter, and the cash flow gap has widened further compared to the previous quarter, increasing market concerns about the return on AI investment from tech giants. Other semiconductor stocks are also under pressure. Nvidia fell 4% on Friday, Broadcom (AVGO.US) fell more than 5%, and Qualcomm (QCOM.US) plummeted 11%.

As technology companies continue to invest huge sums of money to build AI infrastructure, investors are increasingly concerned about whether related investments can be converted into actual profits within a reasonable period of time.

However, Matt Orton, chief market strategist at Raymond James, believes that recent adjustments in technology stocks do not mean that the fundamentals of the industry have fundamentally deteriorated. He said that the current market needs to re-examine the concentration of positions and valuation levels in the technology sector rather than viewing this sell-off as a crisis for the entire industry. “I don't think this is the time for the market to fully liquidate, but investors should really think seriously. Although fundamentals are still strong, the technology sector's holdings are still too concentrated.”