Intel shares plunged 30% on Friday, putting the chipmaker on course for its biggest one-day decline on record as concerns over weakening personal computer demand and the rising costs of the artificial intelligence boom unsettled investors.
The sharp fall followed Intel’s quarterly outlook, released on Thursday, which projected revenue more than $1 billion below market expectations. The company also warned that it did not expect to generate positive cash flow this year.
The forecast intensified concerns about the financial pressures facing technology companies as they invest heavily in AI infrastructure while dealing with rising production costs and weaker demand in some consumer markets.
Intel’s Warning Triggers Wider Technology Selloff
Intel’s outlook raised concerns across the technology industry, particularly among companies that depend on consumer electronics sales.
PC manufacturers such as Dell, smartphone maker Samsung and PlayStation creator Sony faced renewed investor scrutiny as soaring memory prices threatened to increase costs across the sector.
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Technology stocks were already under pressure after financial results from Meta and Alphabet highlighted the enormous spending required to compete in the AI infrastructure race.
Amazon added to those concerns on Thursday by reporting a substantial cash outflow and signalling that capital expenditure would rise further next year, following already significant investment plans for 2026.
“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.
More Than $146 Billion in Market Value at Risk
Friday’s decline threatened to erase more than $146 billion from Intel’s market capitalisation.
The US government, which became the company’s largest shareholder after acquiring a 10% stake in August last year, faced a potential reduction of nearly $12 billion in the value of its holdings.
Concerns also spread to credit markets. The cost of insuring Intel’s debt against default surged to a record high.
Five-year credit default swaps widened by 17.5 basis points to 124.75, putting them on course for their largest one-day increase since October 2022, according to Markit data.
However, major investments from the US government and Nvidia have strengthened Intel’s financial position.
The company reported $21.84 billion in cash and cash equivalents at the end of September, compared with $46.32 billion in long-term debt.
Global Semiconductor Stocks Come Under Pressure
The selloff extended beyond Intel, hitting semiconductor manufacturers and technology companies across major markets.
Shares of Advanced Micro Devices, Arm, Qualcomm, Nvidia, Broadcom and Micron fell between 4% and 12%.
In Europe, Dutch semiconductor equipment maker ASML dropped more than 6%, while Taiwan Semiconductor Manufacturing Company declined nearly 2%.
China’s technology-heavy STAR50 index also fell to its lowest level in more than two months.
South Korea’s AI-sensitive KOSPI index lost 3.5%, while Samsung Electronics shares dropped 3%, putting the company on track for its first monthly decline since July.
The downturn also affected US server manufacturers. Dell Technologies, Hewlett Packard Enterprise and Super Micro Computer shares fell between 6% and 11%.
Memory Chip Shortage Adds to Intel’s Challenges
Friday’s plunge followed a strong rally that had more than doubled Intel’s share price during the year, building on gains of more than 80% in the previous year.
Demand for central processing units (CPUs), which help power AI agents and chatbot responses, had helped bring Intel back into focus after years of struggling to benefit from the AI boom.
The company’s efforts to become a major contract chip manufacturer had also gained momentum.
However, the investment required to expand its manufacturing operations has placed pressure on cash flow. Supply disruptions have also limited its ability to meet growing demand for data-centre chips.
Intel’s personal computer chip business, which accounted for roughly half of its third-quarter revenue, faces additional pressure from rising memory prices. Suppliers have shifted more production capacity towards high-bandwidth memory used in AI systems, tightening supplies for other applications.
Seaport Research Partners analyst Jay Goldberg said the latest selloff reflected “a loss of faith in management’s credibility.”
He criticised Intel’s production planning, saying the company was producing too many chips for consumer PCs during a weak market while failing to manufacture enough processors for AI servers amid strong industry demand.
Investors Reassess the Cost of the AI Boom
Intel’s latest forecast has added to concerns that the rapid expansion of AI infrastructure could create financial pressure even for established technology companies.
While demand for AI-related chips remains a major growth driver, manufacturers face rising capital requirements, supply constraints and changing demand across consumer and data-centre markets.
The broader technology selloff suggests investors are increasingly scrutinising whether companies can convert heavy AI investment into sustainable revenue and cash flow.
