Intel shares plunged around 28% on Friday after the chipmaker warned that its fourth-quarter results would come in below expectations. The fall cut $12 billion from the value of the government’s holdings, according to CNBC. The company is still up more than 70% for the year, but its latest outlook has put a sharp focus on the costs and constraints facing its business.
A weaker forecast rattles investors
Intel expects fourth-quarter revenue of $15 billion to $16 billion, while analysts had been looking for around $17 billion. The company also said its gross profit margin would fall to 37% from 43%. Heavy investment is expected to leave it with no positive cash flow.
Together, those signals point to pressure on both sales and the resources Intel is putting into its operations. Investors reacted to the gap between the company’s forecast and expectations, driving one of Intel’s worst trading days ever.
The government bought a 10% stake in Intel over a year ago under the Trump administration. Nvidia also took a large stake in Intel in 2025. Both investors saw the value of their holdings affected by Friday’s decline, though the source describes the investments as still profitable so far.
AI growth is raising costs for PC buyers
Intel linked weaker PC demand to the AI industry’s appetite for memory and other components. As those parts are absorbed by AI-related demand, PC prices have risen, putting more strain on buyers.
On the company’s call, Intel CEO Lip-Bu Tan said customers had begun signaling a slowdown in PC purchases as memory prices and availability changed. He also said system endpoint prices had increased significantly year to date, adding pressure to already limited IT budgets.
This creates a difficult dynamic for Intel. Demand tied to AI can support parts of the technology industry while making components less available or more expensive for PC makers and their customers. For Intel, that pressure is showing up in its expectations for the personal computer market.
Data center sales are growing, with capacity limits
Intel’s data center business offers a brighter part of the picture: revenue there grew 78% over the year-ago quarter. Yet growth in sales does not automatically mean the company can meet all potential demand or quickly expand the business.
The source says Intel needs more capacity at its fabs and more external customers to use them. That puts execution and manufacturing expansion at the center of its prospects in data centers, where it competes with Taiwan Semiconductor Manufacturing Co.
One of Intel’s new fabs in Arizona is operational. The next one is not expected to be online until 2028, leaving a significant wait before that additional facility can contribute.
What the setback says about Intel’s outlook
Friday’s selloff reflects a near-term outlook with several pressures at once: a revenue forecast below analysts’ expectations, a lower expected gross margin, no positive cash flow, and a PC market affected by component costs and availability.
At the same time, the data center business is growing, and Intel’s shares remain higher for the year despite falling from the very high prices they reached over the summer. The central question is whether Intel can turn that growth into a larger business while expanding fab capacity and bringing in outside customers.
The government’s $12 billion reduction in stake value underscores how quickly a market decline can change the paper value of a large investment. Intel’s longer-term position will depend on how its manufacturing plans and business mix develop alongside the immediate challenges highlighted in its forecast.