Intel's worst stock drop since the 1970s wipes $12B off the government's stake
A weak earnings forecast and a deadly fab explosion sent Intel shares down nearly 30%, denting the year-old US government stake and rattling AI-linked tech stocks broadly.
What happened: Intel shares plunged roughly 28-29% on Friday, October 30, the company's worst trading day since the 1970s, after it forecast fourth-quarter revenue of just $15-16 billion, well short of the $17.1 billion Wall Street expected. The slide erased about $12 billion from the US government's 10% stake in Intel, a position the Trump administration took just over a year ago, and cost Nvidia, another major Intel investor, roughly $6 billion. The stock had climbed about 150% this year before the report; even after the crash, it's still up roughly 70% year-to-date.
Why it matters: This wasn't just an Intel story. The same week, Amazon and Alphabet also sold off sharply, with Alphabet posting its worst day on record, and the Nasdaq dropped 2.9% as investors grew uneasy about whether the hundreds of billions being poured into AI infrastructure will pay off. For Intel specifically, US taxpayers now have less to show for an unusual direct government stake in a private chipmaker. And the slowdown behind Intel's warning, rising PC prices because AI data centers are consuming the same memory chips PC makers need, is a cost landing on ordinary computer buyers, not just investors.
What's actually dragging Intel down: Two separate problems combined. First, an explosion at an Intel fab in Israel this month killed two workers and seriously injured another, and will cost about $600 million in lost revenue over two quarters. Second and bigger: global PC shipments fell 4% as memory and component prices soared, squeezing IT budgets, because AI data centers are buying up the same chips PCs need. Meanwhile Intel's data-center and AI chip revenue jumped 78% to $7.3 billion, showing where growth now lives, but its foundry business, which makes chips for other companies, still has no confirmed outside customers, though Intel says announcements are coming within two quarters.
The rollout: Intel expects the PC slowdown to continue through at least the first half of next year. Its newest Arizona fab is now shipping advanced 18A chips, but the next Arizona facility won't open until 2028, limiting how fast Intel can add capacity or win external manufacturing customers to compete with Taiwan's TSMC. An Ohio fab, originally due in 2025, only recently got its first structural truss, with reports it may lease space to memory maker SK Hynix. CEO Lip-Bu Tan says he's confident in long-term CPU demand but will keep spending disciplined until that demand is proven.