Intel Shares Drop 25.6% in Premarket, Near Worst Daily Loss Since 1974

Benzinga Pro data showed Intel shares dropping 25.6% to $68.52 in Friday's premarket trading. A decline of that size would approach the 26.1% loss recorded on August 2, 2024. Only the 29.9% fall on July 5, 1974, was larger across more than five decades of trading. The premarket price implied a one-day market value loss of about $125 billion. Intel shares had gained 278% during the first half of 2026, the strongest six-month increase since 1972.

Intel reported third-quarter revenue of $16.5 billion, a 21% year-over-year increase that matched consensus. Adjusted earnings of 52 cents per share exceeded analysts' expectation of 40 cents. Gross margin reached 44.1%, compared with a forecast of 41.8%. However, Intel forecasts fourth-quarter revenue between $15 billion and $16 billion, putting the $15.5 billion midpoint about 9% below consensus of $17.11 billion. Intel projects adjusted earnings of 25 cents per share, against expectations of 44 cents. Intel forecasts gross margin of 38%, compared with expectations of 42.4%.

Rising memory chip prices are leading computer manufacturers to reduce inventories sharply. Intel projects a sequential decline of more than 20% in client computing revenue. Cantor Fitzgerald analyst C.J. Muse said the guidance implies PC unit shipments roughly 45% below a year earlier, an unexpectedly large reduction. Cantor said customers began reducing production plans only in late August. HP shares declined 8.5% before the open. Dell Technologies shares fell 10.1% in premarket trading.

Demand for server processors supporting agentic AI, systems that perform tasks independently, greatly exceeds Intel's production capacity. Shortages of Intel 3 wafers and substrates limit sequential data center growth to a mid-teens percentage in the fourth quarter and roughly zero in the first quarter of 2027. An incident at Intel's Fab 28 facility in Israel adds about $300 million in fourth-quarter revenue losses. The Fab 28 incident also creates roughly two percentage points of margin pressure.

Muse retained a Neutral rating and reduced Intel's price target from $125 to $90, citing memory, wafer and substrate shortages that require substantial estimate revisions. Muse described the outlook by saying, "Houston, we have a problem." Muse lowered the 2027 earnings estimate from $2.15 to $1.65 per share, below consensus of $2.13. Muse's $90 price target represents 30 times the analyst's 2028 earnings estimate of $3 per share. Muse also identified a clear loss of server market share to Advanced Micro Devices. AMD shares declined 8.6% in premarket trading. Muse highlighted guidance for negative free cash flow throughout 2027. Cantor expects capital expenditure of $28 billion to $30 billion next year, compared with about $20 billion in 2026.

However, Muse has not adopted a bearish stance. Intel management expects revenue and gross margin to increase in 2027. Intel management projects that the server processor market will expand from about $40 billion today to roughly $200 billion over five years.

Bank of America analyst Vivek Arya changed Intel's rating from Buy to Neutral and lowered the price target from $145 to $100. Roth Capital analyst Suji Desilva also changed Intel's rating from Buy to Neutral and reduced the price target from $120 to $70. Benzinga Analyst Ratings tracks 33 analysts covering Intel, with 10 Buy ratings, 22 Hold ratings, one Sell rating and a $100 average price target. The VanEck Semiconductor ETF fell 4.9% before the open as chip stocks broadly declined alongside Intel.

Intel would still show a gain of about 86% this year after the indicated Friday decline. Intel shares had risen nearly 150% through Thursday. The premarket price would leave Intel about 52% below the stock's 52-week high of $142.35.