Intel shares plunge 29% as weak PC demand and AI spending concerns trigger broad tech sell-off

Intel's shares dropped 29% on Friday, putting the company on track to lose more than US$137 billion in market value and deepening a sell-off across technology equities. The decline followed the chipmaker's forecast that fourth-quarter revenue will be between US$15 billion and US$16 billion, below analysts' average estimate of US$17.07 billion, and its statement that it does not expect positive cash flow this year.

Analysts said the warning gave investors a reason to reduce exposure to chip stocks. > "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 at Hargreaves Lansdown.

The sell-off spread to server makers, with Dell Technologies, Hewlett Packard Enterprise and Super Micro Computer each falling between 6% and 10%. The broader semiconductor sector also slipped, as shares of AMD, Arm, Qualcomm, Nvidia, Broadcom and Micron declined between 2% and 10%.

Higher memory prices, driven by a shift toward AI-focused high-bandwidth memory chips, are raising PC costs and further dampening already weak consumer demand. PC chips, which represent roughly half of Intel's third-quarter revenue, are expected to fall more than 20% sequentially after a 5% drop in September.

Brian Mulberry, chief market strategist at Zacks Investment Management, noted that expanding the profitable Xeon server line could help offset the weakness in the PC segment. He added that weaker sales volumes, higher manufacturing costs and an out-of-cycle product mix create pressure on near-term earnings.