Intel shares plunge 25% as it warns that the AI boom's thirst for chips is hurting business

• Intel shares dropped as much as 25% in premarket trade Friday after disappointing earnings.
• The chipmaker said it expects revenue to drop in Q4 as AI demand squeezes the supply of chips for PCs.
• Computing is facing “one of the most significant supply shortages in history,” its CEO said.

As of around 7:45 a.m. ET, shares in the California-headquartered company were set to open at $68.48, down from $92.07 at Thursday’s close.

On Thursday, it reported third-quarter revenue of $16.5 billion, up 20% from a year earlier. However, it forecast fourth-quarter revenue of $15 billion to $16 billion and earnings per share of $0.25 — down from $0.52 in the third quarter.

The AI boom is increasing demand for memory and server chips needed to train and run AI models, creating shortages that have pushed up memory prices. That makes PCs more expensive to build and buy, prompting computer-makers to order fewer Intel chips.

“The industry continues to navigate one of the most significant supply shortages in history, driven by the unprecedented demand for super intelligence,” Intel CEO Lip-Bu Tan said on Thursday’s earnings call.

Intel’s client-computing group, which sells chips for PCs, generated $8.1 billion in the third quarter, down 9% from the previous quarter.

The company said it expects the division’s revenue to decline by more than 20% in the fourth quarter.

Intel’s share price has boomed in 2026, climbing more than 130% since the start of the year. That rise has stalled in recent weeks amid a wider sell-off in the tech sector.

Friday’s sharp drop comes during a busy earnings week, with other tech firms also reporting disappointing numbers. On Thursday, Google recorded the largest single-day market cap loss in its history, shedding $500 billion in value after worse-than-expected revenue from its AI search tool pushed shares down 12%.

Chip shortages hit home

Intel said higher memory prices and limited availability were making computers more expensive. It expects global PC sales to decline about 12% this year, and by roughly another 10% in 2027.

“We do not expect a sustained recovery until memory availability improves and pricing begins to normalize,” said Dave Zinsner, the chief financial officer.

The company’s data-center business offered some hope, with revenue up nearly 80% year over year to $7.3 billion.

However, Intel said it could not meet all the demand for its server chips.

It cited a two-week shutdown at its Israeli plant following what Tan called “an unfortunate and tragic accident,” which it expects to cut fourth-quarter revenue by about $300 million.

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