Intel shares plummeted 25% in premarket trading Friday after the chipmaker reported weaker-than-expected guidance and disclosed a factory explosion in Israel that will cost $600 million in lost revenue over two quarters. The drop, equivalent to a $121.7 billion reduction in market capitalization, follows a Thursday earnings report that missed analyst expectations and cited ongoing challenges in the PC market and memory chip shortages.
Intel’s fourth-quarter revenue forecast of $15 billion to $16 billion fell short of estimates, with adjusted earnings per share projected at $0.25, down from $0.52 in the prior quarter. The company also reduced its gross margin outlook by 200 basis points due to the Israel factory blast, which killed two workers and injured a third. Production at the Kiryat Gat facility is expected to resume by the end of the week, though Intel is still assessing salvageable wafers.
Immediate Impact and Market Reaction
The sell-off extended beyond Intel, dragging down other chip stocks. AMD dropped 4%, Broadcom fell 2%, and Nvidia, Micron, Qualcomm, and Arm Holdings saw declines between 1% and 6% in extended trading. The SOX semiconductor index, which had surged over 60% in 2026, also retreated amid broader tech sector weakness. Google’s parent company Alphabet lost $500 billion in market value on Thursday after disappointing AI-related revenue, further amplifying investor caution.
Intel’s client-computing group, which supplies PC chips, reported $8.1 billion in third-quarter revenue, a 9% decline from the prior quarter, and forecast a more than 20% drop in fourth-quarter revenue. The company attributed the slowdown to soaring memory prices, which have increased PC manufacturing costs, and softening demand in the global PC market. Global PC shipments declined 4% in the second quarter, according to Counterpoint Research.
Underlying Challenges and CEO Statements
Intel CEO Lip-Bu Tan described the industry as navigating “one of the most significant supply shortages in history”, driven by unprecedented demand for AI-related chips. However, the company’s data center and AI revenue grew 78% year-over-year to $7.3 billion, offsetting some of the declines in its PC business. Tan emphasized that 2027 would present “a very severe issue” due to rising memory component costs, affecting the entire market.
The Israel factory explosion has added to Intel’s challenges, with the incident forcing a two-week shutdown at the Kiryat Gat fab, which produces 10-nanometer data center chips. Finance chief David Zinsner confirmed the blast would reduce fourth-quarter revenue by $300 million, with a similar impact expected in the first quarter of 2027. Intel is assessing which wafers remain usable, though the full extent of the disruption may extend beyond the initial shutdown period.
Broader Industry Context
The chip sector’s struggles reflect a shift in demand from PCs to AI and data center infrastructure, leaving companies like Intel caught between rising costs and uneven market dynamics. While AI-related chip demand remains strong, consumer PC sales continue to weaken, pressuring companies reliant on that segment. Analysts note that memory prices have surged, benefiting data center chipmakers but squeezing PC manufacturers and consumers.
Intel’s stock had more than doubled in 2026 before the recent declines, but October’s sell-off erased much of those gains. The company has reiterated its commitment to long-term investments in capacity and foundry expansion, though near-term headwinds persist. Investors are closely watching for signs of a PC market recovery and the resolution of supply chain bottlenecks, which could stabilize Intel’s outlook in 2027.