Intel Shares Plunge 23% on Weak Outlook and Kiryat Gat Plant Explosion

Intel shares plummeted 23% in after-hours trading following a disappointing quarterly outlook and warnings over negative cash flow. The downturn is driven by production hurdles, weakening PC demand, and a fatal explosion at the company's Kiryat Gat plant in Israel.

The October explosion at the Kiryat Gat manufacturing facility resulted in two fatalities and one severe injury, prompting a two-week shutdown. Intel Chief Financial Officer David Zinsner told the press that the plant is scheduled to resume production operations by the end of the week.

The Kiryat Gat facility primarily manufactures data center chips using 10-nanometer process technology. Zinsner noted that the incident will reduce fourth-quarter revenue projections by approximately $300 million and gross margin forecasts by two percentage points, with a comparable impact expected in the first quarter of 2027.

Financial Outlook and Market Impact

Intel projects fourth-quarter revenue between $15 billion and $16 billion, falling short of analysts' expectations of $17.07 billion. Adjusted earnings per share are forecasted at 25 cents, compared to the anticipated 43 cents.

Chief Executive Officer Lip-Bu Tan addressed analysts in a conference call, stating that the company failed to meet robust customer demand during the quarter amid production capacity constraints, surging memory prices, and softening personal computer demand.

Despite the weak outlook, third-quarter results showed revenue rising 21% to $16.51 billion, with adjusted earnings reaching 52 cents per share, topping the consensus estimate of 40 cents.

The drop in Intel shares weighed on the broader semiconductor sector, pulling down equities of Nvidia, AMD, Broadcom, Micron, Qualcomm, and Arm by 1% to 6% in after-hours trading.