Intel stock plunges 28.6%, its worst day in 52 years

The chipmaker’s stock suffered its steepest one-day fall in decades after it forecast revenue and earnings below Wall Street estimates, citing a prolonged outage at an Israeli fabrication facility and a sluggish personal computer market.

Intel’s stock dropped 28.58% on Friday (October 30) to $65.76 after the chipmaker issued a financial outlook that fell short of expectations, pointing to a long production halt at a plant in Israel and continued softness in the personal computer market.

The slide put the shares on course for their worst session since 1974 and the second-largest single-day decline in the company’s history. It also interrupted a strong run, as the stock had climbed about 150% this year before the earnings release, and it is a setback for chief executive Lip-Bu Tan’s turnaround effort.

Israel disruption and weak PC demand

Intel’s guidance takes into account an explosion at one of its fabrication plants in Israel earlier in October, which killed two workers and seriously injured a third. Tan described the incident as an “unfortunate and tragic accident” and said the resulting prolonged shutdown is holding up shipments of chips built on the 10-nanometre process. Chief financial officer David Zinsner said the stoppage would cost roughly $600 million in revenue over two quarters.

The plant outage comes on top of pressure from a slowing PC industry, where rising prices for memory and other components are dampening demand. Counterpoint Research estimates that global PC shipments fell 4% in the second quarter compared with a year earlier. Zinsner said he expects the slowdown to last at least through the first half of next year, adding that Intel would keep investing prudently in capacity and working capital to boost supply and support future growth.

For the current quarter, Intel projected revenue of $15 billion to $16 billion, well below the $17.1 billion analysts had expected, according to LSEG. It also forecast adjusted earnings of 25 cents per share, against a market estimate of 43 cents. Adjusted figures leave out certain items included in the company’s reported results.

DA Davidson downgraded the stock to neutral from buy in a note titled “Not fixed yet.” The analysts acknowledged that weakness was affecting the whole PC sector but questioned whether Intel’s valuation was justified.

Government and Nvidia stakes take a hit

The sell-off also hit major shareholders. The US government took a 10% stake in Intel more than a year ago under the Trump administration, and Friday’s fall wiped about $12 billion off its value, although the investment remains in profit overall. Nvidia’s holding in the company lost around $6 billion.

Tan’s recovery plan relies heavily on growing Intel’s foundry business, which makes chips for other companies. The firm is manufacturing its advanced 18A technology in high volume in Arizona, but it has yet to secure outside customers for those chips. On the earnings call, Tan said Intel expects to announce a couple of customers over the next two quarters.