Intel stock drops 28% in a day, wiping $12 billion off US government's stake

Intel’s stock crashed about 28% on Friday, one of the worst single-day drops in the company’s history, after the chip maker gave a weaker-than-expected outlook for the fourth quarter. The fall cut roughly $12 billion from the US government’s 10% stake in Intel, CNBC reported. The Trump administration had the government take that stake just over a year ago. Nvidia, which also bought a large stake in Intel in 2025, saw its own shares dip as the sell-off spread across the chip sector.

Intel told investors to expect fourth-quarter revenue of $15 billion to $16 billion, short of the roughly $17 billion analysts had projected. The company also said its gross profit margin would fall to 37% from 43%, and that heavy investment spending means it does not expect positive cash flow. Despite Friday’s drop, Intel’s stock is still up more than 70% for the year, and the government’s stake remains profitable, though both have fallen sharply from highs reached over the summer.

Memory prices squeeze the PC business

Intel’s core problem is that the AI industry is consuming large amounts of memory chips and other components that would otherwise go into consumer PCs, driving up prices for finished computers. “Our customers began signaling a PC slowdown based on the memory prices and availability,” Intel CEO Lip-Bu Tan said on the earnings call. “Year-to-date system endpoint prices have increased significantly, placing additional pressure on already limited IT budgets.” That demand squeeze hits a business Intel has long depended on for steady revenue, even as the company works to rebuild its position in advanced manufacturing.

There is a brighter spot in the results. Intel’s data center business grew revenue 78% from the same quarter a year earlier, reflecting demand for AI infrastructure. But Intel says that growth is constrained by how much manufacturing capacity it can bring online and how many outside customers it can sign up to use its factories, known as fabs. It is competing directly with Taiwan Semiconductor Manufacturing Co., the dominant maker of advanced chips for other companies. One new Intel fab in Arizona is already running, but the company does not expect its next one to be operational until 2028, leaving a multi-year gap before it can meaningfully expand output.

The result is a company caught between two trends moving in opposite directions: an AI boom that is lifting its data center revenue sharply, and the same AI boom draining the memory supply its PC customers need, at prices many of them can no longer easily absorb. Intel has not said when it expects memory availability or PC prices to normalize. Investors will be watching Intel’s actual fourth-quarter results against Friday’s guidance, how quickly new fab capacity comes online beyond Arizona, and whether PC makers find ways to manage component costs before the next earnings report.