Intel shareholders will remember this Friday for a long time. The stock dropped about 28.6% in a single session, its worst day since July 1974. Only one day in the company's history, July 5 of that year, was worse. Around $140 billion in market value disappeared, and the stock is now down more than half from its record high in June.
The strange part is that the quarter itself wasn't bad. Adjusted earnings came in at 52 cents a share, beating estimates, and data center revenue climbed to $7.3 billion, up almost 80% in a year. The problem was what Intel said about the next three months. It expects $15 billion to $16 billion in revenue, below the roughly $17 billion Wall Street wanted, and earnings of just 25 cents a share against forecasts of 43 cents.
Several factors are behind the weak outlook. A factory accident in Israel will knock about $300 million off fourth-quarter revenue. On top of that, Intel now expects PC shipments to fall about 12% this year and another 10% in 2027. AI is a big part of that. Data centers are buying up memory chips, prices are rising, and PCs are getting squeezed out.
Bernstein analyst Stacy Rasgon didn't sugarcoat it, calling the outlook "terrible" and cutting his price target from $110 to $75. CEO Lip-Bu Tan said rebuilding Intel will be a multiyear journey.
There's a political twist too. The U.S. government owns 9.9% of Intel, bought at $20.47 a share, and Friday's slide wiped more than $10 billion off that stake, though it's still worth about triple what taxpayers paid. Dell and HP fell as well, and the Nasdaq lost 2.9% on the day.