What just happened? Intel was one of the biggest surprises on the stock market this year. Its shares nearly quadrupled between January and a record high in late June – a rise fueled by demand for the CPUs behind agent AI. But on Friday, the chipmaker gave back much of those gains in a single session. The stock closed down nearly 29% at $65.76, its worst day since 1974.
Oddly enough, the quarter itself went well. Intel beat Wall Street’s earnings estimates. Data center revenue also rose nearly 80% year over year to $7.3 billion. But the forecast for the last three months of the year fell well short of expectations: analysts had expected sales of around $17 billion. Intel only expects $15 to $16 billion.
The weak point is PCs. AI data centers are buying up so much of the world’s storage that laptops and desktops have become significantly more expensive this year. Therefore, fewer of them sell. Intel now expects PC shipments to fall by about 12% in 2026 and another 10% in 2027. An improvement is only expected when storage supplies and prices return to normal.
The forecast must also take into account a closure of the company’s factory in Kiryat Gat, Israel. Two workers were killed in an explosion there earlier this month.
Based on Yahoo Finance’s 1973 count of closing prices, only a nearly 30% drop in July 1974 was worse than Friday’s. Bank of America, DA Davidson, Seaport and Roth all downgraded the stock to neutral on the same day. The US government also felt the impact, as its approximately 10 percent stake lost around $12 billion in paper value. Yet Washington’s shares are still worth more than three times the $20.47 apiece it paid last year.
Intel’s decline came a day after Alphabet’s worst session ever. Google parent company lost about $500 billion in market value on Thursday after its quarterly report showed that spending on AI infrastructure pushed free cash flow into the red by $9.07 billion.
Meta’s earnings weren’t much better. Both the company and Alphabet are now more than 20% below their 52-week highs, according to data from Yahoo Finance. Even Nvidia is about 12% below its peak, largely because investors fear its biggest customers will have to cut back on spending in 2027.
In Seoul, SK Hynix fell 7% and Samsung fell 3% on Friday. As a result, the South Korean KOSPI fell by almost 3.5%. Both companies make the memory that AI data centers have sucked up, so the same boom that has squeezed Intel’s PC business is now also unsettling investors in the boom’s biggest winners.
For anyone buying a PC, none of this suggests that cheaper hardware will be available soon. Storage prices could continue to rise next year. Some forecasts suggest that real relief will not come until 2028.
