$Intel (INTC.US)$On Friday, the stock plunged 29%, marking its largest single-day drop since the 1970s. Earlier, the company had issued fourth-quarter guidance that fell far short of market expectations, weighed down by an accident at its Israeli chip factory and the ongoing weakness in the personal computer (PC) market. The news dealt a severe blow to investors' confidence in Intel's business turnaround and once again put CEO Lip-Bu Tan's corporate transformation plan under intense scrutiny.
Intel's after-hours earnings report on Thursday showed that the company expects fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings per share of $0.25, both significantly below market expectations. According to LSEG data, analysts had previously forecast Intel's fourth-quarter revenue at $17.1 billion and adjusted earnings per share at $0.43.
Intel Chief Financial Officer David Zinsner stated that the downturn in the PC market is expected to persist at least through the first half of 2027. "We believe the slowdown in the PC market will continue at least into the first half of next year," Zinsner said, adding that the company will continue to invest prudently in capacity and working capital to expand supply and support future growth.
Weak demand in the PC market is closely linked to rising costs of components such as memory chips. According to data from market research firm Counterpoint Research, global PC shipments declined 4% year over year in the second quarter of 2026, reflecting how cost pressures are dampening end‑user demand.
In addition to weak industry demand, an explosion at Intel's chip manufacturing plant in Israel earlier this month further disrupted the company's production and delivery capabilities. The accident resulted in two employee fatalities and one serious injury, and led to a prolonged shutdown of the facility, impacting Intel's shipments of 10-nanometer chips.
Lip-Bu Tan described it as "an unfortunate and tragic accident" during the earnings call, adding that the prolonged plant shutdown has had a significant impact on product supply. Zinsner expects the incident to result in roughly $600 million in lost revenue for Intel over the next two quarters.
The stock price once surged 150% this year, but Wall Street remains skeptical about Intel's recovery prospects.
This sharp plunge hit Intel particularly hard, as the stock had already accumulated a gain of about 150% year-to-date before the earnings report was released.
Previously, the market had high hopes for Intel's recovery, partly because, with the rapid growth of generative AI applications, the importance of central processing units (CPUs) has once again come into focus, boosting expectations for demand for related products. However, the latest earnings guidance indicates that Intel still faces significant operational challenges, particularly a sluggish PC business and uncertainties in its manufacturing operations.
On Friday, D.A. Davidson analysts downgraded Intel's stock rating from "Buy" to "Neutral," expressing concerns about the company's recovery trajectory. The analysts noted that while they understand the PC market is under industry-wide pressure, given the extent of Intel's business weakness, the current valuation remains difficult to justify.
The plunge in Intel's stock price also left the U.S. government and$NVIDIA (NVDA.US)$Investments in the company had previously shrunk significantly. Last year, the Trump administration pushed for the U.S. government to acquire a 10% stake in Intel to support the development of advanced chip manufacturing within the United States. Although this investment remains profitable, Intel's stock plunge on Friday reduced the market value of the U.S. government's holdings by approximately $12 billion.
Meanwhile, NVIDIA, which previously invested $5 billion in Intel, saw the market value of its holdings shrink by about $6 billion on Friday.
The foundry business remains pivotal to the company's transformation, but advanced-node processes have yet to secure external customers.
For Lip-Bu Tan, who took office as CEO in March 2025, Intel's latest underwhelming results undoubtedly represent a major setback. Since assuming his role, Tan has been committed to reviving the company's business, aiming to help Intel make up for the development opportunities it missed at the early stages of the artificial intelligence boom. In particular, the foundry business is seen as a key component of Intel's transformation strategy.
Intel is the only U.S.-based company with advanced logic chip manufacturing capabilities. It has now achieved mass production of its most advanced 18A-node chips at its new facility in Arizona, hoping to thereby provide customers with$Taiwan Semiconductor (TSM.US)$Advanced chip manufacturing options beyond that.
The company's next fab in Arizona is expected to begin operations by the end of 2028. However, despite progress in advanced process technologies, Intel has yet to secure external customers for its next-generation chip manufacturing business, and the commercial prospects of its foundry operations remain uncertain.
Lip-Bu Tan stated on the earnings call that the company expects several customers to be ready to announce their partnerships in the next two quarters, while Intel is making "significant progress" on its next-generation 14A process technology.
Selloff in tech stocks spreads, with the Nasdaq down nearly 3%.
As Intel's stock price plummeted, the U.S. tech sector was undergoing a broad sell-off. On Friday,$Nasdaq Composite Index (.IXIC.US)$Down 2.9%, bringing to a close a week marked by lackluster earnings reports from tech giants. Earlier, Google's parent company…$Alphabet-A (GOOGL.US)$On Thursday, the stock price plunged more than 12%, marking the largest single-day drop since the company went public, and it continued to slide on Friday.
$Amazon (AMZN.US)$It also fell 1.4% on Friday. The company had previously reported third-quarter revenue and earnings that both missed market expectations, while maintaining its 2026 capital expenditure forecast of $220 billion.
Notably, Amazon has posted negative free cash flow for the second consecutive quarter, with the cash-flow gap widening further from the previous quarter, intensifying market concerns about the return on AI investments by tech giants. Other semiconductor stocks are also under pressure. NVIDIA fell 4% on Friday,$Broadcom (AVGO.US)$Down more than 5%,$Qualcomm (QCOM.US)$Then it plunged 11%.
As technology companies continue to invest heavily in building AI infrastructure, investors are increasingly focused on whether these investments can translate into tangible returns within a reasonable timeframe.
However, Matt Orton, Chief Market Strategist at Raymond James, believes that the recent pullback in tech stocks does not signal a fundamental deterioration in the sector's fundamentals. He notes that the market should focus on reassessing the concentration of holdings and valuation levels within the tech sector, rather than viewing this sell-off as a crisis for the entire industry. "I don't think this marks a full-blown market liquidation, but investors should indeed take a close look—at least as long as fundamentals remain strong—since tech‑sector exposure remains overly concentrated."
Editor/Jeffy