Finance1 min read

Intel on course for worst day ever, triggers global chip rout

By · Published by Everything Blog

In short

The company expects fourth-quarter revenue to reach between $15 billion and $16 billion, falling short of Wall Street estimates. Finance chief David Zinsner confirmed that the chipmaker does not anticipate positive cash flow this year, further unnerving market participants. In response, global technology assets tumbled as concerns over cooling personal computer demand and high production costs prompted widespread profit-taking. Server manufacturers and international equipment suppliers were also swept into the selloff as earnings pressures broadened.

Key points

  • Prolonged stagnation in the personal computer market continues to hamper core financial r…: Prolonged stagnation in the personal computer market continues to hamper core financial results by affecting roughly half of Intel's revenue.
  • Surging manufacturing outlays and higher memory expenses are actively preventing the semi…: Surging manufacturing outlays and higher memory expenses are actively preventing the semiconductor manufacturer from generating positive cash flow this year.
  • Global technology shares face broad selling pressure as investors question the near-term…: Global technology shares face broad selling pressure as investors question the near-term returns on expensive artificial intelligence infrastructure investments.

Sources checked by our analysis pipeline: 1

Oct 30 : Intel tumbled 29 per cent on Friday and was on track for its sharpest one-day decline, deepening a broader retreat in technology stocks as investors grew increasingly wary of weakening PC demand and the vast spending required to build out AI infrastructure.

The steep fall put the US chipmaker on track to shed more than $137 billion in market value, underscoring the challenges facing CEO Lip-Bu Tan's turnaround as a prolonged PC slump offsets heavy investments in AI and manufacturing expansion.

Semiconductor stocks, including Advanced Micro Devices, Arm Holdings, Qualcomm, Nvidia, Broadcom and Micron, fell between 2 per cent and 10 per cent.

"The market is in a sell first, ask questions later mood right now, and Intel's warning has given investors an easy excuse to take some money off the table across chip stocks," said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

The selloff spread to server makers, reflecting investor caution toward companies tied to the semiconductor and AI infrastructure supply chain.

Shares of server makers Dell Technologies, Hewlett Packard Enterprise and Super Micro Computer fell…

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