Intel Shares Plunge Following Weak Business Outlook and Market Pressures

Chip giant Intel suffered a sharp market decline, losing over twenty percent of its value after its latest business forecast deeply disappointed Wall Street. The company is grappling with a drop in personal computer sales driven by a rapid increase in memory prices, alongside ongoing supply chain bottlenecks for high-demand data center processors.

For the current quarter, Intel projected revenue between $15 billion and $16 billion, falling well short of analyst expectations that hovered around $17 billion. Furthermore, the company forecast an adjusted earnings per share of 25 US cents, missing the market consensus of 43 cents. In after-hours US trading, Intel shares plummeted by roughly 22 percent.

Chief Financial Officer David Zinsner stated that the company has observed a slowdown in business for weeks as soaring memory prices suppress computer purchases. He emphasized that no improvement is anticipated through at least the first half of 2027. Chief Executive Lip-Bu Tan noted that the entire market is impacted, warning that memory prices will remain a severe challenge throughout the upcoming year. Intel now forecasts a ten percent contraction in the personal computer market for 2027, following a twelve percent decline this year.

Memory prices have surged explosively in recent months due to high demand for expanding artificial intelligence data centers. While Intel benefits from the artificial intelligence boom through its processors, Lip-Bu Tan explained that the company has been unable to adequately meet demand due to raw material shortages and the temporary closure of a manufacturing facility in Israel.

During the past quarter, revenue grew by 21 percent year-over-year to $16.5 billion, aligning roughly with analyst projections. However, net profit declined by 18 percent to $3.3 billion. Intel's stock had climbed strongly in prior months as investors anticipated that new production methods would allow the company to capitalize on data center technology. Additionally, Lip-Bu Tan has been working to establish Intel as a contract manufacturer for other chip suppliers, with the company investing approximately $20 billion in factories and equipment this year and planning further spending increases next year.

The downturn in technology shares extended beyond Intel, as major US tech companies reported mixed financial results. Microsoft posted strong gains in cloud computing and free cash flow despite record investments, though its shares dipped slightly following plans for a major bond offering. Conversely, Alphabet shares dropped sharply due to disappointing cash flow figures.

Meanwhile, broader European markets experienced positive momentum as the DAX recovered to early September levels, closing up 1.31 percent at 26,039.68 points. The European Central Bank kept interest rates unchanged, while President Christine Lagarde indicated that a rate increase could be considered in December and announced her early departure from office in February 2027.