Why Intel Is Down Today
Key Points
Micron stock fell about 4% to $897 on Oct. 30 after Intel guided fourth-quarter revenue to $15.0 billion to $16.0 billion, well short of the $17.1 billion Wall Street wanted.
Intel said PC chip revenue dropped 5% to $8.1 billion; its CFO warned the slowdown would last at least through the first half of 2027, and pricier PCs driven by memory costs are part of the problem.
I think this looks like a classic boom and bust, where the pricing power behind Micron's $54.23 billion quarter starts to erode the very demand that created it.
- 10 stocks we like better than Micron Technology ›
Micron Technology (NASDAQ:MU) stock is sinking, down 5.5% to $897 as of 112:45 p.m. ET on Friday, Oct. 30, following Intel's less-than-stellar earnings forecast and slipping PC sales.
The S&P 500 and the Nasdaq Composite are down 1.5% and 2.6%, respectively.
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Intel earnings forecast drags down chip stocks
Intel (NASDAQ:INTC) beat Wall Street's targets for its Q3 earnings, while coming in roughly in line on the top-line:
- Revenue: $16.51 billion vs. about $16.5 billion expected
- Adjusted EPS: $0.52 vs. $0.40 expected
However, the company also said that PC chip revenue fell 5% year over year to $8.1 billion. CFO David Zinsner warned the slowdown would run at least through the first half of 2027.
The company then lowered expectations for its next report. It's now projecting Q4 revenue to come in at $15.0 billion to $16.0 billion -- Wall Street wanted $17.1 billion. The company forecast a gross margin of 38%, down from the 44.1% in Q3.
Intel is on pace for one of its worst days ever as the whole semiconductor market falls.
Image source: Micron.
How expensive memory chips weigh on Intel's PC sales
A big reason for the slowdown in chip sales is pricing. PCs have jumped in price, leading customers to pull back. Why? Memory costs have a lot to do with it. Because of the demand from AI data centers, Micron and other memory makers have enjoyed incredible pricing power, and while that's led to soaring revenue -- $54.23 billion last quarter -- it's starting to eat into consumer sales downstream of Micron.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Micron Technology. The Motley Fool has a disclosure policy.
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