Intel heads for worst day on Wall Street in more than 50 years on weak guidance

Intel shares plummeted 29% on Friday and headed for their worst day since 1974 after the chipmaker issued weaker-than-expected guidance due to a plant shutdown in Israel and ongoing softness in the PC market.

The stock was on pace for its second-steepest drop on record. It's a major setback for CEO Lip-Bu Tan, who was hired in March 2025, and has since been on a campaign to revive the company after it missed out on the early years of the artificial intelligence boom.

Heading into Thursday's earnings report, Intel shares were up about 150% this year, buoyed by demand for central processors, which are becoming critical to agentic AI workloads. Analysts at D.A. Davidson downgraded the stock to neutral from buy on Friday in a report titled, "Not fixed yet."

"We understand the PC market is being impacted at the industry level," the analysts wrote. "However it is hard to justify the current multiple when weakness is so significant."

Amazon shares also sold off on Friday, slipping about 1%, after the company reported a third-quarter miss on the top and bottom line while maintaining its capital expenditure forecast for 2026 of $220 billion. Amazon also reported negative free cash flow for the second consecutive quarter, and a big increase from the previous period.

The Nasdaq Composite slid more than 2.5%, capping off a week of rough tech earnings. Alphabet on Thursday suffered its worst day on record, plunging more than 12%. The stock fell again on Friday.

Other semiconductor names also notched declines. Chip giant Nvidia fell 4%, while Broadcom dropped about 6% and mobile chipmaker Qualcomm tumbled 12%.

Not a 'moment of reckoning'

Investors are growing nervous about the massive AI spending from the tech giants and whether their investments will pay off.

"I don't think this is a moment of reckoning but I think it's a moment where investors should take a long thought about how positioning across the space still remains crowded even though the fundamentals are strong," Matt Orton, chief market strategist at Raymond James, told CNBC's "Squawk Box Europe" on Friday.

For Intel, the disappointing forecast reflects a PC market that's getting hammered due to soaring costs for memory and other components. Global PC shipments declined 4% in the second quarter from a year earlier, according to Counterpoint Research.

Intel said it expects adjusted earnings per share of 25 cents this quarter on revenue between $15 billion and $16 billion. Analysts were expecting revenue of $17.1 billion and EPS of 43 cents, according to LSEG.

"We see the PC slowdown continuing at least through the first half of next year," Intel finance chief David Zinsner, said in the release. "We will continue making disciplined investments in capacity and working capital to increase supply and support future growth."

The guidance also accounts for the effects of an explosion at a fab in Israel that killed two workers and seriously injured a third earlier this month. The incident will cost the company about $600 million in lost revenue over two quarters, Zinsner said.

Tan said the explosion, which he called an "unfortunate and tragic accident," caused an "extended shutdown" at the plant, impacting shipments of 10-nanometer chips.

Key to Tan's turnaround effort is Intel's foundry business, which has struggled to find its footing.

Intel is the only U.S.-based manufacturer of advanced logic chips, and is now in high-volume production of its most advanced 18A chip out of its new fab in Arizona, providing an alternative to Taiwan Semiconductor Manufacturing Co. Its next Arizona fab is expected to begin operations by the end of 2028.

Intel still has no external customers for its new chips.

"We're going to have a couple of customers ready to announce the next two quarters," Tan said on the call, adding that Intel is making "tremendous progress" on its coming 14A chips.