Why Intel Is Down Today
Micron is sliding after Intel's weak forecast, but I think the bigger warning is in memory pricing, which is pushing up PC prices and starting to eat into the demand behind the boom.
Intel's stock price is experiencing a decline today, dropping 5.94% to $897 as of 1:45 p.m. ET on Friday, October 30. The tech giant's earnings forecast came up short, and personal computer sales have been on the decline. The broader market sentiment is also impacted, with the S&P 500 and Nasdaq Composite falling by 1.5% and 2.6% respectively.
Despite exceeding Wall Street's expectations for Q3 earnings, Intel's top-line revenue saw a 5% decrease year-over-year to $8.1 billion. CFO David Zinsner has expressed concern, stating that the slowdown will persist at least until the first half of 2027. In response to the reported decline, Intel has revised its expectations for the next report, projecting Q4 revenue between $15.0 billion and $16.0 billion, a significant drop from the $17.1 billion anticipated by Wall Street.
The company's forthcoming earnings forecast indicates a gross margin of 38%, a sharp contrast to the 44.1% margin achieved in Q3. One of the primary drivers behind the semiconductor market's downturn is pricing. Personal computers have seen a price increase, causing customers to reduce their purchases. Furthermore, the memory cost issue plays a significant role, as AI data centers have driven memory demand, benefiting Micron and other memory makers with soaring revenue of $54.23 billion in the previous quarter.
However, this strong performance from memory makers is now affecting consumer sales downstream, potentially contributing to Intel's current challenges.
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