Intel shares plunge 28.6% in worst session since 1974 as memory costs hit PC demand

Intel shares lost 28.6% on Friday (Oct. 30), their worst session since July 1974. The chipmaker had warned that soaring memory-chip prices have made PCs expensive enough to choke off demand.

Only one day in Intel's trading history has been worse: a fall of nearly 30% on July 5, 1974. Friday's slide from a Thursday close of $92.07 erased close to $140 billion in market value, according to Yahoo Finance. It also beat the roughly 26% plunge of August 2024, when Intel suspended its dividend and announced plans to cut more than 15% of its workforce.

The quarter Intel reported late Thursday was not the problem. Revenue rose 21% to $16.5 billion. Adjusted earnings of 52 cents a share beat forecasts. Data center revenue jumped 78% to $7.3 billion on AI demand for server processors.

The outlook was the problem. Intel guided fourth-quarter revenue to $15 billion to $16 billion, against the roughly $17 billion analysts had expected. It guided adjusted earnings to 25 cents a share.

Chief executive Lip-Bu Tan blamed memory. "Our customers began signaling a PC slowdown based on the memory prices and availability," he said. He added that the price of finished systems had risen significantly this year. The correction had also sped up over the past two months as PC makers worked down inventory.

The squeeze runs back to the AI build-out. Data centers are absorbing the world's memory chips, which leaves less of it, at higher prices, for laptops and desktops. Intel now expects PC shipments to fall about 12% this year and roughly 10% in 2027. Chief financial officer David Zinsner said the slowdown would continue "at least through the first half of next year."

A second blow came from Israel. A deadly explosion at an Intel plant there, unrelated to the war, forced an extended shutdown that disrupted shipments of 10-nanometre chips. Tan called it an "unfortunate and tragic accident." Intel expects the incident to cost about $300 million in fourth-quarter revenue.

Bernstein analyst Stacy Rasgon called the outlook "(in a word) terrible." The rout follows a run in which Intel stock nearly quadrupled between January and its June record. Even after Friday, it was up close to 80% for the year.

Hong Kong felt it before Wall Street opened. Lenovo Group fell more than 7% on Friday, in a session that closed hours after Intel's results came out, while the Hang Seng Index rose 1.46%. Lenovo had already dropped 7.92% on Oct. 22, after research firm Omdia reported that global shipments of desktops, laptops and workstations fell 21.2% year on year in the third quarter, to 58.1 million units.

Lenovo reports results for the quarter to September on Nov. 19. That will be the first word from a company that sells the machines, not just the chips inside them, since Intel's warning. Intel says the slump will not ease until memory supply and prices return to normal.