Intel shares suffered one of their steepest declines on Friday, plunging roughly 28 percent after the semiconductor manufacturer issued a fourth-quarter revenue outlook that fell well short of Wall Street estimates. The sharp downturn erased $12 billion from the value of the federal government's stake, which was acquired by the administration over a year ago. Nvidia, which secured a financial stake in Intel in 2025, also experienced downward pressure as the broader chip sector faced heavy selling.
Leadership pointed to a distinct shift in the personal computer market as a primary driver for the gloomy forecast. Explaining the quarterly trajectory, CEO Lip-Bu Tan noted that enterprise customers began flagging a slowdown in PC demand driven by rising component costs. The artificial intelligence boom has heavily consumed global memory supplies and hardware components, driving up endpoint prices and straining corporate IT budgets.
Despite the weak PC segment, pockets of growth emerged elsewhere in the business. Revenue within Intel's data center division surged 78 percent compared to the same period last year. However, scaling that momentum remains dependent on expanding manufacturing capacity and securing external clients for its fabrication plants to compete effectively with industry heavyweights like Taiwan Semiconductor Manufacturing Co.
Looking ahead, Intel expects fourth-quarter revenue to land between $15 billion and $16 billion, trailing analyst consensus estimates of roughly $17 billion. Gross profit margins are projected to contract to 37 percent from 43 percent, with heavy capital expenditures pointing toward near-term negative cash flow. While the company's Arizona fab is operational, subsequent manufacturing facilities are not slated to come online until 2028.
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