Intel Stock Plunge Drags Chipmakers as Nasdaq Sheds 2.9%

Intel's Forecast Hits the Chip Sector

Intel did not report a weak quarter. It gave a weak outlook, and that turned a rough earnings week into the sharpest tech selloff since the summer. On Friday, October 30, Intel shares had their worst day since the 1970s. The stock fell 29% after the company's fourth-quarter guidance came in well below Wall Street estimates.15 The selling spread through chip designers, equipment makers, foundries and analog suppliers. Amazon's earnings miss added to the pressure and renewed doubts about the AI trade.11

The broader damage was large. The Nasdaq Composite fell 2.9% and the S&P 500 lost 1.8%.13 One tally put both losses at their worst level since June.7 AJ Bell's Dan Coatsworth estimated that close to $3 trillion has come off the Nasdaq since its October 6 peak.13

A Good Quarter Followed by a Poor Forecast

The third-quarter results were strong. Revenue rose 21% from a year earlier to $16.5 billion. Adjusted earnings per share came in at $0.52, ahead of the roughly $0.40 consensus.16 Data Center and AI revenue jumped 78% to $7.3 billion, which Intel described as its fastest growth in 15 years. Foundry sales rose 58% to $6.7 billion.17

The guidance was the problem. Intel expects fourth-quarter revenue of $15 billion to $16 billion and adjusted EPS of $0.25. Analysts had expected about $17.1 billion in revenue and $0.43 per share, according to LSEG data.15 Intel also expects non-GAAP gross margin to fall to 38% from 44.1% in the third quarter.16 It projects that client revenue will drop more than 20% from the previous quarter as PC makers cut inventory.18 CFO Dave Zinsner said positive free cash flow next year looks unlikely because several large manufacturing projects need funding at the same time.16

Three causes appear across the reporting:

• Weak PC demand. High memory-chip prices are raising computer prices and holding back purchases.13
• Limited server supply. Intel cannot build enough Xeon server processors to meet demand.20
• The Israel plant accident. CEO Lip-Bu Tan called it an "unfortunate and tragic accident." It caused an extended shutdown that affected shipments of 10-nanometer chips.15

Reports differ on the cost of the Israel accident. One account says it will cut fourth-quarter revenue by about $300 million and gross margin by 200 basis points.18 Another puts the total revenue loss at about $600 million over two quarters.20 These figures may not conflict, since one covers one quarter and the other covers two. Either way, the plant problem is only part of the gap between Intel's guidance and Wall Street estimates.

The exact size of Intel's drop also varies by source. Most outlets report a decline of about 29%, with the stock closing at $65.76.16 Morningstar puts the closing drop at 31%.13 Estimates of lost market value range from about $120 billion1114 to more than $146 billion.16 The overall picture is the same in every account: this was one of the worst single-day losses in Intel's history.

My reading is that the selloff reflects a reset of expectations more than a judgment on the turnaround. Before the report, Intel shares were up about 150% for the year.15 A preliminary deal to manufacture some Apple chips had pushed the stock above $130 in May.16 With that much optimism priced in, Intel had little room for disappointment. D.A. Davidson's downgrade note was titled "Not fixed yet," which fits the market's view.15 Morningstar's Brian Colello cut his fair value estimate to $85 from $105.13

How the Selling Spread

Investors sold more than PC-exposed stocks. Coverage agrees on the main declines, though the numbers differ depending on whether they were taken at the open or the close:

• AMD fell nearly 10% early in the session.11
• Qualcomm lost about 11%.15
• Dell ended down about 10.8%.17
• Broadcom opened about 4% lower11 and closed down 7.3%, according to Morningstar.13
• Nvidia's loss was reported at 3.3%, 4% and 5% at different points.131415 One report says the drop pushed Nvidia's market value below $5 trillion.14
• Applied Materials fell nearly 5% and Lam Research about 5.5%, reflecting their exposure to chipmakers' spending plans.11

The selling also reached Asia and Europe. SK Hynix fell 8.5% and Samsung 4.3%. ASML lost 5.4%, and STMicroelectronics fell 3% even after reporting better-than-expected guidance the day before.13 The iShares Semiconductor ETF was down about 7% in premarket trading.19 Investors who hold several index funds were hit more than once: Nvidia and Intel together made up about 23% of SMH and 11% of QQQ.18

The trend did not start with Intel. Alphabet had its worst day on record on Thursday, falling more than 12%.15 Its results raised concerns that AI-driven search may earn less than traditional search.11 Amazon missed estimates and reported a larger negative free cash flow.13 "Investors are increasingly unhappy at the huge sums of money being spent on AI infrastructure without a clear road map" for returns, Coatsworth said.13

The main tension in the coverage is that AI demand looks real while the stocks are falling. Intel's data center business is growing quickly, but the company cannot make chips fast enough to capture that demand.20 Meanwhile, the largest AI spenders are being punished for how much they spend. The market seems to be questioning both who can supply the AI buildout and whether the buyers will earn a return on it.

Oil Adds Pressure from War Risk

Oil was rising during the tech selloff, which made the outlook for interest rates harder. Brent crude was on track for its fourth straight monthly gain on Friday. The expiring December contract rose to $117.38 a barrel, and WTI climbed to about $104.21 Prices rose after an attack on a tanker in the Strait of Hormuz, as the US-Israeli war on Iran entered its eighth month.21 For October, Brent was heading for a gain of nearly 14% and WTI about 15%.30

The week swung back and forth. Oil rose Wednesday on reports that the US had told Gulf states to prepare for a short but intense campaign against Iran after the midterm elections.29 Prices also rose after the Houthis claimed a missile strike on Saudi Arabia's Ras Tanura refinery, which processes 550,000 barrels a day.28 Oil fell Thursday after reports that Vice President JD Vance had contacted Iranian officials about restarting talks.23 Emergency releases from the Strategic Petroleum Reserve are adding supply, but the reserve is near its lowest level since 1982.22

This matters for chip stocks because of rates. The Fed held rates at 3.75%–4% in a 10-2 vote, and traders put the chance of a December hike at about 78%.10 Oil above $100 makes a hike more likely. Analysts have said a drop in WTI toward $70 would strengthen the case for eventual rate cuts.26 Goldman Sachs' Daan Struyven sees possible outcomes ranging from $120 if attacks on ships increase to $80 if exports return to normal.26 Higher oil prices raise inflation risk, which pushes rate-hike expectations up. That hurts stocks valued on long-term growth, such as AI-linked companies.

Bitcoin Falls Mainly on the Binance Hack

Crypto fell during the same period, but the main cause was different. Binance said a hack had affected $6.3 billion in assets. The exchange pledged to cover losses and paused deposits and withdrawals.2 One blockchain intelligence firm said a North Korean unit was likely responsible.1 Bitcoin dropped to about $76,460, and leveraged bets worth about $1.53 billion were liquidated. Most of those were bets on rising prices.2

Tech weakness had already been weighing on Bitcoin. It slipped below $80,000 on Thursday, before Intel reported, after Alphabet's results and the Fed's hawkish hold.3 On Friday, crypto-related stocks fell more than Bitcoin. Coinbase lost 10.6%, Circle 9.3% and Strategy 7.8%, while Bitcoin fell only about 0.9% over 24 hours.7 Crypto had largely absorbed the hack the night before. Gold also fell to a one-year low, so it did not serve as a safe haven.4

What to Watch

The selling on Friday hit both AI suppliers and AI spenders. It came alongside oil above $100, a Fed leaning toward a hike, and a major crypto exchange hack. These events have separate causes, but together they show how fragile risk appetite has become. Next week brings the November 3 midterms, possible US action against Iran afterward, and more earnings and jobs data.23 For chip stocks, the main question is whether memory supply improves enough to steady PC demand in 2027.17 Until it does, Intel's strong data center growth is unlikely to support the stock.