Intel's stock had more than doubled in a year. On Thursday evening, Oct. 29, it gave back a big piece of that in late trading. The chip maker said high prices for memory chips are squeezing PC sales. It expects that pinch to last into 2028. The stock fell 20.60% after the bell.
The quarter was mixed. Intel (INTC) grew sales 21% to $16.51 billion, just shy of the $16.56 billion analysts wanted. Net profit fell to $3.32 billion from $4.06 billion a year earlier. Its data center and AI unit jumped 78% to $7.3 billion. Adjusted profit came to 52 cents a share, against 41 cents expected. The trouble was the next three months. Intel guided sales of $15 billion to $16 billion. Analysts had expected $17.29 billion, the Journal's Anissa Gardizy, Robbie Whelan and Elias Schisgall reported.
Two things hurt. First, memory chips stay expensive, so PCs cost more to build, and that weighs on sales. Finance chief David Zinsner sees the PC market shrinking about 12% this year and 10% in 2027. Sales in its PC-chip group already fell 5% to $8.1 billion. Second, an accident at its factory in Kiryat Gat, Israel, shut the plant for weeks. That cuts some server shipments. Intel's outlook counts a hit of about $300 million from it. Chief Executive Lip-Bu Tan said he was disappointed Intel was "not able to meet strong customer demand."
Washington's bet
The government owns 9.9% of Intel. It paid $8.9 billion for that stake. Thursday's paper said the stake had been worth as much as $61 billion before a selloff cut it to about $41 billion. That was before the report. The stock closed Thursday at $92.07 and traded at $73.10 after hours. By our own pull at midday Friday, it was at $63.85, down 30.66% from Thursday's close. Jonathan Hillman of the Council on Foreign Relations said the government's portfolio has many dealmakers and "no chief investment officer."
Our read
This is an Investments/Risk story, IN04. One supplier's shortage is another customer's cost. The high memory prices that have made Micron (MU) a giant winner are the same prices squeezing the PCs Intel's chips go into. A fund labeled chips holds both sides of that trade. Intel is held at small weights in 3 of our model books. Nothing was added or trimmed. Micron is held at weight in 23 books. The good news for one is the bad news for the other, so the two can pull against each other.
Here's the check for your own plan. Look for a single stock in your accounts that has doubled, the way Intel did this past year. It might be company stock in your 401(k), or shares you kept from an old job. Check what share of your total it is now. A stock that doubles can quietly become nearly twice the slice you chose. Washington's own Intel stake slid from as high as $61 billion to about $41 billion in a few weeks. If that one stock has grown past what you'd buy today, it's worth a talk in your next review. You pack the umbrella when the forecast says clouds, not after the rain.