The chipmaker's projected fourth-quarter revenue missed Wall Street targets, prompting a severe selloff that also hit tech peers like Nvidia. Rising hardware costs fueled by the artificial intelligence boom have pressured client IT budgets, causing wider operational challenges. Despite the steep single-day valuation drop, long-term federal holdings in the company retain overall gains for the calendar year. Additionally, Intel warned that heavy capital investments will leave it with no positive cash flow as its gross profit margin declines from 43% to 37%.
Key points
Rising hardware costs driven by the AI sector have tightened enterprise IT budgets and we…: Rising hardware costs driven by the AI sector have tightened enterprise IT budgets and weakened the PC market.
Both the U.S. government and Nvidia remain profitable on their Intel holdings due to gain…: Both the U.S. government and Nvidia remain profitable on their Intel holdings due to gains exceeding 70% this year.
Capacity constraints will persist as Intel works to rival TSMC, with its next fabrication…: Capacity constraints will persist as Intel works to rival TSMC, with its next fabrication plant not opening until 2028.
Sources checked by our analysis pipeline: 1
Intel’s stock suffered one of its worst days ever on Friday, crashing around 28% after the chip giant reported a weaker-than-expected outlook for the fourth quarter.
This route reduced the value of Intel’s holdings by the government by $12 billion, CNBC reports. The Trump administration had the government buy 10% stake over a year ago. Nvidia, which also took a big stake in Intel in 2025, saw its stock drop a bit on Friday as well. Much of the tech industry — especially chipmakers — were caught in the selloff.
Intel’s stock is still a profitable investment for the government so far (and for Nvidia), as it’s up more than 70% for the year, even if its dropped significantly from the sky high prices it commanded over the summer.
The scare-off was caused when Intel warned to expect revenue of $15 billion to $16 billion in the fourth quarter when analysts were looking for around $17 billion. It also warned that its gross profit margin would decline to 37% from the 43%, and it was investing so heavily, it expected…
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