Intel Plunges 29% in Worst Single-Day Drop Since 1974 After Catastrophic Q4 Guidance Miss

Intel shares collapsed as much as 29% to 31% on October 30, marking the chipmaker's worst single-day percentage decline since 1974 and potentially its worst day on record, after the company issued fourth-quarter guidance dramatically below Wall Street expectations. Intel guided Q4 revenue to $15 billion to $16 billion, roughly $1.1 billion to $2 billion short of the $17.1 billion consensus, with adjusted EPS of $0.25 against an expected $0.43 and gross margins of approximately 38%. The stock fell from a prior close of $92.07 to near $65, wiping out roughly $137 billion to $150 billion in market capitalization and leaving Intel down more than 53% from its June 30 record high.

The Q3 report itself beat expectations, with revenue of $16.5 billion up 21% year over year and adjusted EPS of $0.52 against a $0.40 estimate. Data Center and AI revenue surged 78% year over year to $7.3 billion, the strongest growth in 15 years, driven by Xeon server CPU demand and an ASIC business running at an annualized rate of roughly $2.8 billion. The problem was everything else. Client Computing revenue fell 5% to $8.1 billion, and Intel now expects PC-related revenue to drop more than 20% sequentially in the fourth quarter. Management warned the PC market slowdown arrived "sooner and deeper" than anticipated, driven by rising memory prices that are making computers more expensive and forcing PC makers to cut chip orders as they work through excess inventory. Intel projects industry PC shipments will decline roughly 12% in 2026 and another 10% in 2027, with the inventory correction expected to persist through at least the first half of 2027.

Compounding the guidance miss, an accident at Intel's Fab 28 facility in Israel is expected to reduce fourth-quarter revenue by approximately $300 million and cut gross margin by roughly 200 basis points, with a similar revenue impact anticipated in the first quarter. Intel also said it cannot produce enough server chips to meet demand due to manufacturing and advanced packaging shortages, with meaningful capacity relief not expected until the second half of 2027. The company plans to increase capital spending significantly above this year's roughly $20 billion level and does not expect to generate positive free cash flow in 2027, a warning that jolted credit markets: Intel's five-year credit default swap widened to a record 123.5 basis points on the day.

Bank of America analyst Vivek Arya downgraded Intel to Neutral from Buy and cut his price target to $100 from $145, warning of a "surprisingly sharp drop in PC shipments" of 25% to 30% quarter over quarter in Q4 and flagging that Intel's products "are not yet technically competitive against AMD and ARM-based rivals that are growing two to four times faster." Roth Capital and Seaport Research Partners also downgraded to Neutral, JPMorgan's Harlan Sur cut his price target to $80 from $85 while maintaining Neutral, and at least 17 analysts in total slashed price targets. The selloff spread across the semiconductor sector: AMD fell roughly 8% to 12%, Nvidia dropped about 4%, Broadcom lost nearly 4%, Dell tumbled 11% to 13%, HP fell 9%, and Arm Holdings dropped 10%. The Philadelphia Semiconductor Index fell approximately 10%. The Nasdaq Composite dropped 2.9% on the session, its largest decline since March 2025, touching a three-month low, while Nasdaq 100 futures entered correction territory with a roughly $1.7 trillion wipeout in market value.

The US government's equity stake in Intel, held through the Commerce Department, lost roughly $10 billion to $12 billion in a single session, though the position remains worth approximately $27.7 billion, still representing an estimated $18.9 billion paper gain from the original investment. Intel CEO Lip-Bu Tan, who was hired in March 2025 to lead the company's turnaround, described the situation as the result of "unprecedented demand for super intelligence" squeezing chip supply away from the PC market. Intel separately outlined its view that the server CPU total addressable market could rise above $200 billion over five years, and a report emerged of an unconfirmed low-power chip called Moon Lake in development on Intel's 18A process, though the company did not officially confirm the project.