Key Highlights

● Intel shares fell about 25% pre-market after a weak fourth-quarter outlook.

● Third-quarter Revenue rose 21% to $16.5 billion, with adjusted EPS of 52 cents.

● Intel expects PC segment sales to fall more than 20% sequentially.

● A Fab 28 shutdown in Israel is expected to cut about $300 million of revenue.

Intel (NASDAQ:INTC) shares were down 24.73% at $69.30 in pre-market trading as of 8:03 a.m. ET Friday, according to market data, and another source showed $68.99, down 25.07%, at 8:23 a.m. ET. The stock closed Thursday at $92.07, down 3.62%, before the report. Extended-trading data showed it at $72.99 just after the 4:01 p.m. ET release, and losses briefly narrowed to about 17% before deepening again overnight. If the losses hold, one report said, Intel could shed more than $123 billion in Market Value and open at its lowest level in about six months.

A quarter that beat, an outlook that broke

The third quarter itself was solid. Intel reported revenue of $16.5 billion, up 21% from a year earlier, and adjusted Earnings of 52 cents a share, more than double a year ago and above estimates near 40 cents, according to its release and market commentary. Data Center and AI revenue rose 78% to $7.3 billion and Intel Foundry revenue climbed 58% to $6.7 billion. The Client Computing and Physical AI Group, which sells PC chips, slipped 5% to $8.1 billion.

The problem was the next quarter. Intel guided fourth-quarter revenue to $15 billion to $16 billion, below the consensus of $17.07 billion and below what it just reported, and forecast adjusted earnings of 25 cents a share against expectations of about 43 to 44 cents. Adjusted gross Margin is guided to 38%, down from 44.1% in the third quarter.

Memory prices, a PC slowdown and a fab disruption

Intel tied the weak outlook mainly to PCs. One report said PC chips made up roughly half of third-quarter revenue and that Intel expects PC segment sales to fall more than 20% sequentially this quarter. "Our customers began signaling a PC slowdown based on the memory prices and availability," chief executive Lip-Bu Tan said, as quoted in market reports. Finance chief David Zinsner said, "we see the PC slowdown continuing at least through the first half of next year."

The squeeze comes from the AI boom itself: Demand for high-bandwidth memory in data centers has tightened Supply and pushed up memory costs, which raises PC prices and dampens demand. Microsoft (NASDAQ:MSFT) flagged the same dynamic in its Windows Business this week.

There is also a one-off hit. Market commentary reported that a shutdown at Fab 28 in Israel is expected to cut about $300 million from fourth-quarter revenue. On cash, sources differ on timing: one report said Zinsner does not expect positive Cash Flow this year, while another reported Intel does not expect positive free cash flow in 2027.

The ripple effect, risks and what to watch

Intel is a member of the Nasdaq-100 and the S&P 500; it was removed from the Dow Jones Industrial Average in November 2024. Its slide is spilling across semiconductors. One report said Advanced Micro Devices (NASDAQ:AMD), Arm Holdings (NASDAQ:ARM), Qualcomm (NASDAQ:QCOM), Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO) and Micron (NASDAQ:MU) were down 2% to 9% pre-market, Taiwan Semiconductor (NYSE:TSM)'s US shares fell 3.5%, and ASML (NASDAQ:ASML) dropped 5.2% in Europe. Nasdaq-100 futures were down about 2.6% around 8 a.m. ET, per market data.

"Weaker sales volumes, higher Manufacturing costs, and an out-of-cycle product mix is a recipe for the stock to decline," one chief market strategist said, adding that it will be important to see whether Intel can expand supply of its profitable Xeon server chips.

Key risks include a longer PC downturn, further fab disruptions and the cost of funding its foundry build-out. Traders will watch whether buyers step in at the open, while AMD's and Qualcomm's results next week offer the next read on PC and data-center chip demand.