Intel saw its shares tumble 28.6% on Friday, October 30, delivering one of its steepest market declines in more than half a century after issuing a weak outlook.

The chipmaker closed at $65.76, eliminating more than $140 billion in market capitalization in a single session.

The slide also cut the U.S. government's holding in Intel by roughly $11 billion, leaving it valued at about $12 billion.

Intel cautioned that soft PC demand, climbing memory costs, and heavy manufacturing outlays would continue to pressure its business.

Why Did Intel's Stock Crash?

Third-quarter revenue reached $16.5 billion, up 21% year over year, yet investors focused on the firm's guidance for the final quarter of 2026.

The company projects fourth-quarter revenue between $15 billion and $16 billion, falling short of analysts' roughly $17 billion estimate, and expects gross profit margin to dip from 43% to about 37%.

This signals a smaller share of revenue will remain after direct production costs, while expansive manufacturing spending will strain cash flow, sparking a sell-off.

Rising RAM Prices Are Hurting PC Sales

Higher component costs, especially for memory, are a major headache for Intel.

AI firms buying large volumes of memory chips for data-center expansion have lifted prices, making PCs more costly to produce.

Consequently, PC manufacturers see weaker demand as buyers postpone upgrades.

CEO Lip-Bu Tan said customers have already warned of slowing PC sales due to higher memory prices and limited component supply.

He added that rising computer costs add pressure on businesses with tight IT budgets.

Intel expects the PC slowdown to persist at least through the first half of 2027.

US Government Loses Billions on Intel Investment

The market drop also impacted the U.S. government's stake in Intel.

In August 2025, the Trump administration bought roughly a 10% share to boost domestic semiconductor production.

After Friday's fall, the investment's market value slipped by about $11 billion to $12 billion.

However, the shares still trade well above the purchase price, meaning the government has not realized an actual loss.

The decline also hurt Nvidia, which invested in Intel in 2025, as its shares fell alongside the broader tech sector.

Intel's Data Center Business Is Still Growing

Even with soft PC demand, Intel posted strong growth in its data-center segment.

Revenue from the Data Center and AI division rose 78% year over year to $7.3 billion, driven by server-processor demand from cloud and AI providers.

Nevertheless, the firm struggles to meet that demand, needing more manufacturing capacity and additional customers for its chip-making services.

Intel is aiming to compete more directly with Taiwan Semiconductor Manufacturing Company (TSMC).

One Arizona fab is already running, while a second will not be online until 2028.

For now, Intel must juggle weaker PC sales with heavy investment in capacity needed for future growth.