Intel shares fell approximately 28% on Friday following a weaker-than-expected outlook for the fourth quarter. The chipmaker warned of quarterly revenue between $15 billion and $16 billion, well below the analyst consensus of roughly $17 billion. It also projected a gross profit margin decline to 37% from 43% and stated it expects no positive cash flow due to heavy investment. This move reduced the value of the government’s 10% stake by $12 billion. The Trump administration purchased this holding over the past year. Nvidia also saw its stock drop slightly as much of the tech industry faced a selloff.
The core issue is that rising memory prices and availability constraints are hurting PC sales while increasing system endpoint costs. Intel CEO Lip-Bu Tan noted that customers are signalling a slowdown as these higher prices place additional pressure on limited IT budgets. Revenue from the data centre business grew 78% over the year-ago quarter, but growth remains hamstrung by capacity limits. Intel is competing with Taiwan Semiconductor Manufacturing Co while waiting for new fabrication plants to come online. One new facility in Arizona is operational, but the next is not expected until 2028.
- Quarterly revenue guidance set at $15 billion to $16 billion
- Gross profit margin expected to fall to 37%
- Next Arizona fab not online until 2028
