Intel Down 29% Intraday, on Course for Its Worst Day Ever, After Forecasting a PC Slump Driven by AI-Era Memory Prices
Intel's third-quarter revenue rose 21% to $16.5 billion, with data center revenue up 78%, but it forecast fourth-quarter revenue of $15 billion to $16 billion, below the $17.07 billion analysts expected. It expects PC chip sales to fall more than 20% from the third quarter as higher memory prices hit demand. Reuters said the shares were down 29% in trading on October 30, on track for their sharpest one-day fall.
The AI build-out now has a visible casualty inside the chip industry: the PC. Intel's data center business grew 78% last quarter, yet the company forecast a sharp drop in PC chip sales as memory makers shift capacity to AI, and investors sent the stock down 29% in trading on Friday, October 30, putting it on track for its sharpest one-day fall, Reuters reported.
The quarter and the guide#
Intel's release, published after the market closed on October 29, shows third-quarter revenue of $16.5 billion, up 21% from a year earlier, and non-GAAP earnings of $0.52 a share. Data Center and AI revenue rose 78% to $7.3 billion, which chief financial officer David Zinsner called "our strongest data center revenue growth in 15 years." The client computing group, which makes PC chips, fell 5% to $8.1 billion.
Intel forecast fourth-quarter revenue of $15.0 billion to $16.0 billion, below the analysts' average of $17.07 billion compiled by LSEG, Reuters reported. Zinsner said in the release that Intel sees "the PC slowdown continuing at least through the first half of next year." Reuters reported that Intel expects PC chip sales to fall more than 20% from the third quarter, and that Zinsner said the company does not expect positive cash flow this year.
Why memory matters#
Reuters attributed the PC weakness to higher memory prices, driven by suppliers moving capacity to the high-bandwidth memory used in AI chips. That is the other side of the record quarters memory makers have just reported: SK Hynix said it expects demand to outrun supply through 2030, and Samsung posted record operating profit on HBM4.
Chief executive Lip-Bu Tan said demand for Intel's CPUs "remains robust" and that its "immediate priority is to unlock additional supply" for its Xeon server chips. Reuters said the fall would erase more than $137 billion of Intel's market value and pulled down other chip and server stocks, including AMD, Nvidia, Dell and Super Micro Computer.
Limits#
- The 29% fall and the record are Reuters' intraday figures on October 30; the closing price was not available when we published.
- The more-than-20% PC decline and the cash-flow remark come from the earnings call as reported by Reuters; we did not review a full call transcript.
- Intel's release does not quantify the effect of memory prices.