Why Intel Stock Fell Today

Intel's stock experienced a sharp decline of 8.1% on Thursday, October 22, as oil prices climbed and investors expressed worries about investments in artificial intelligence. The price of Brent crude oil surpassed $112 per barrel following attacks in Saudi Arabia. The S&P 500 and Nasdaq Composite both dropped by 1.2% and 2.6%, respectively.

The looming threat to Middle East energy supplies continued to cast a shadow over the AI sector, intensifying concerns that inflation and borrowing costs would persist for an extended period. Although U.S. Treasury yields dropped Thursday, largely due to political unrest in Europe, they remain significantly higher than they were prior to the war's onset.

For the AI industry, this situation is evident: constructing massive data centers demands substantial funds, and securing this capital is becoming increasingly costly. As an industry reliant on selling the tools for this endeavor, Intel requires customers to sustain their purchases. Meta Platforms further exacerbated market apprehensions with its Q3 earnings report.

While the company projected to increase its capital expenditures (capex) beyond initial estimates by the end of the fiscal year, it reported negative free cash flow (FCF) for the first time since 2012. Additionally, Meta approved a non-voting stock class, which it can utilize to raise capital without reducing CEO Mark Zuckerberg's voting control.

Investors interpreted this move as a sign that financing costs are making further borrowing unappealing, potentially prompting the company to pursue equity sales instead.