Intel shares fell nearly 30% in a single day, their worst session since the 1970s, after the company issued a soft Q4 outlook that overshadowed strong AI chip demand.

For the eighth quarter running, Intel beat its own targets. A day later, the stock had lost close to 30% of its value.

The chipmaker's fourth-quarter forecast landed well below what Wall Street had expected, and shares ended Friday at $65.76. The sell-off erased more than $146 billion in market value and was Intel's steepest one-day fall in over 50 years.

**Everything comes back to the outlook**

For the fourth quarter, Intel is guiding to revenue between $15 billion and $16 billion. Analysts had penciled in $17.07 billion, so the $15.5 billion midpoint falls about $1.6 billion short.

The profit outlook is weaker still. Intel projects adjusted earnings per share of $0.25, against the $0.43 that Wall Street had modeled.

Margins are also heading down. Gross margin measures how much revenue remains after the direct costs of producing a product are subtracted. Intel's non-GAAP fourth-quarter forecast puts gross margin at 38%, compared with 44.1% in the third quarter.

Most of that drop comes from three sources: softer PC demand, manufacturing constraints that limit how many server processors Intel can ship, and an accident at one of the company's plants in Israel.

**Customers want the chips, but Intel can't make enough**

That leaves Intel in an unusual position. Buyers building out AI infrastructure are queuing for its processors, yet the company lacks the capacity to fill those orders. Meanwhile, its traditional PC business is under pressure, and the factories it depends on for a lasting turnaround are extremely expensive to operate.

The data center figures show how much is riding on this. Revenue in Intel's Data Center and AI division rose 78% from a year earlier to $7.3 billion, with $3 billion in operating profit, a 42% margin.

The quarter was solid across the board. Total revenue climbed 21% year over year to $16.5 billion. Adjusted earnings per share reached $0.52, beating both Intel's guidance of $0.38 and the $0.40 Wall Street consensus. According to Chief Financial Officer Dave Zinsner, this marked the eighth quarter in a row that the company topped its financial expectations.

**Positive cash flow is off the table for next year**

Zinsner described 2027 as an investment year and warned investors not to expect positive free cash flow, the cash a company has left after covering operating costs and capital spending on equipment and infrastructure. Intel is choosing to sacrifice near-term cash generation to fund a larger manufacturing footprint.

"Probably not a dynamic where we are going to have positive free cash flow next year," Zinsner said during the earnings call.

He said Intel is targeting a return on invested capital of at least 20% from its manufacturing node investments, while conceding that several large projects will require heavy spending at the same time.

The goal of this spending is to rebuild Intel's manufacturing arm into a true rival to Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker. Under this foundry model, Intel would produce chips for outside clients in addition to its own products.

Some major names have already joined. Nvidia invested $5 billion in Intel in September 2025 and agreed to co-develop custom processors for PCs and data centers. The deal brought Intel fresh capital and linked its processors to Nvidia's AI platform.

Central to Intel's push to regain technology leadership is its 18A process, the manufacturing technology used for chips such as Panther Lake.

Apple raised hopes even further. A preliminary deal for Intel to build some of Apple's chips helped carry the stock past $130 in May. If finalized, the deal would give Intel a major new customer as Apple looks to spread production across more suppliers.

At $65.76, shares have given back roughly half of that high. Intel now has to ramp up manufacturing output, cope with a contracting PC market, and fund a costly expansion all at once before investors can count on steady cash from the company.