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Intel’s stock crashes, knocking $12B from government’s stake
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- DeepHorus
Intel shares plunged about 28% on Friday, one of the chipmaker’s worst trading days, after it issued a weaker-than-expected fourth-quarter outlook. The rout erased $12 billion from the value of the U.S. government’s 10% stake, according to CNBC. The selloff spread across chipmakers and hit Nvidia, which also holds a large Intel position.
Intel guided fourth-quarter revenue to $15 billion-$16 billion, below analysts’ roughly $17 billion estimate. It also forecast gross margin falling to 37% from 43%. Heavy investment means Intel expects no positive cash flow in the period.
The government bought its 10% stake more than a year ago under the Trump administration. Despite Friday’s drop, Intel remains a profitable investment for the government and Nvidia so far. Intel stock is still up more than 70% this year, though well below summer highs.
CEO Lip-Bu Tan said customers are signaling a PC slowdown tied to memory prices and availability. Year-to-date system endpoint prices have risen significantly, adding pressure to already limited IT budgets, he said on the earnings call. The AI industry’s demand for memory and other components is contributing to higher PC prices.
Intel’s data center business offered a bright spot, with revenue up 78% from a year earlier. Yet the company is constrained until it adds fab capacity and signs more external customers. It must compete with Taiwan Semiconductor Manufacturing Co. in that effort.
One new Intel fab in Arizona is operational, but the next is not expected online until 2028. That timeline limits how quickly Intel can expand capacity and capture more foundry business. For now, investors are focused on weak PC demand and costly manufacturing buildout.
