An earnings miss and weak forecast triggered an enormous slide in Intel. What’s that mean?
Weak Forecast
Bloomberg reports Intel Suffers Worst Stock Drop in Decades on Weak Forecast
Intel Corp. suffered its worst stock rout in more than four decades after the PC industry slump and supply-chain snags hurt its forecast, renewing fears about the chipmaker’s turnaround bid.
Sales in the fourth quarter will be $15 billion to $16 billion, the chipmaker said in a statement on Thursday. Analysts on average estimated $17 billion, and some projections topped $18 billion, according to data compiled by Bloomberg. Profit will be 25 cents a share in the quarter, excluding certain items. Wall Street was projecting adjusted earnings of 43 cents a share.
Intel is contending with a severe slump in the personal computer market. Makers of laptops and desktops — key customers — are struggling with shortages of memory semiconductors and surging component prices. That’s cut into PC shipments and hurt demand from users. In addition, Chief Executive Officer Lip-Bu Tan said his company’s data center unit would have done even better if it hadn’t suffered from shortages of some raw materials and a shutdown of a factory in Israel — supply snags that the company is working hard to fix.
As to the PC market, “one of the main challenges, basically, is memory,” he said. “Memory pricing went up a lot. I think my prediction is that in 2027 it is going to be a very severe issue to all of us. We are not alone — it’s just the whole market is impacted.”
Intel projects the PC downturn will persist through at least the first half of 2027 — with a decline of 10% next year following a 12% slide in 2026. Still, longer term, the company is optimistic about demand for its products and is increasing its spending on new equipment to boost production. It’s growing more confident it will attract orders from other chipmakers that want to use its factories to build their components, Tan said.
“Intel’s earnings highlight the challenges the company faces in pushing its recent turnaround into a sustained recovery,” Emarketer senior analyst Asa Hiken said in a note. Though demand for server processors is booming, “Intel’s disappointing outlook shows that strong demand alone isn’t enough to overcome its near-term challenges, particularly ongoing weakness in its traditional PC business,” he said.
The mixed picture shows the effect that the AI boom has had on Intel’s business. Though data center infrastructure is fueling demand for Intel processors, it also has led to a shortage of memory chips — a type of semiconductor made by Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. That, in turn, has forced up the price of laptops and desktops, and reduced demand for the Intel chips that go into those products.
Though Intel now has enough of a financial cushion to weather downturns, such as the current PC market slump, it still needs to invest in its technology to stay competitive in the long run. It has lost market share to Advanced Micro Devices Inc. in PC and server chips while also struggling to crack the lucrative AI accelerator category dominated by Nvidia.
AI Explosion Hits Me Directly
I recently had a failure on my 8 TB external solid state drive (SSD). I was astonished at what a new 8TB SSD drive would cost.
Fortunately, it was the case that failed not the drive. The case was $30.
I have a nice computer with 64 GB of memory but I am woefully short of GPU (only 4GB) and struggle with some tasks in Photoshop or Pixinsight that are GPU hogs when editing images.
A GPU (Graphics Processing Unit) is a specialized electronic circuit designed to rapidly perform parallel mathematical calculations.
If any Photoshop and On1 users are tuned in, Photoshop is a huge GPU hog and so is On1 NoNoise. Use the On1 plugin from Lightroom, not Photoshop and close down the latter entirely before doing so. That will stop some crashes and speed things up too.
Please check out my photography website! MishMoments.Com
Unfortunately, I cannot add to GPU to my computer. The manufacturers solder that in. So, I repriced a new computer and the price was over $5,000 for what I wanted. That’s over 150 percent higher and all I was really going to get out of that was more GPU.
No thanks, I’ll wait. And that matches Intel’s slow sales.
I could buy external GPU but that is not cheap either.
The explosion of enterprise AI and data centers has severely warped the supply, pricing, and manufacturing focus of high-capacity SSDs and high-end GPUs.
Because enterprise clients buy in massive bulk at premium prices, consumer hardware has faced inflated costs.
Cannibalization of the Supply Chain
- Data Centers Crowding Out Storage & RAM: Enterprise AI buildouts aren’t just taking GPUs; they are consuming massive allocations of NAND flash and high-bandwidth DRAM.
- The Component Cascades: The reason an 8 TB SSD or high-tier GPU carries an exorbitant price tag is that server racks get first priority on wafer capacity. The resulting component inflation ripples directly into complete PC builds.
- Intel’s own CFO explicitly cited soaring memory and component prices as the direct reason PC makers are slashing orders
Macro Takeaway
The market narrative portrays AI spending as a rising tide, but at the consumer tier, it functions as a regressive tax on hardware buyers.
Wall Street projected that consumer PC sales would smoothly rebound, but Intel’s guidance proves that exorbitant sticker prices have forced power users like me into a de facto buyers’ strike.
When a professional content creator, photographer, or data scientist looks at a $5,000 replacement bill and says, “No thanks, I’ll wait,” the tech industry has a fundamental demand problem.
The AI Bubble’s Collateral Damage
The ultimate irony of the current tech cycle is that the AI boom is actively cannibalizing the very consumer market that built these tech giants.
- The VRAM Starvation: Silicon wafers that should be going toward making affordable 12GB or 16GB consumer graphics cards are being diverted to hyper-profitable enterprise AI chips.
- The “AI PC” Illusion: Intel and PC manufacturers are heavily marketing “AI PCs” equipped with Neural Processing Units (NPUs). But for heavy, real-world creative software like Pixinsight or ON1, these NPUs are a useless marketing novelty. Creative pros need raw, brute-force VRAM—something the industry does not provide at a reasonable price.
- The Extended Replacement Cycle: By forcing users to adopt clever software workarounds—like strictly managing open apps to stay within a 4GB ceiling—the industry has broken the corporate upgrade cycle. A 3-year replacement cycle is easily stretching to 6 or 8 years because the financial math of a new purchase simply doesn’t add up.
Intel’s Guidance is the Smoking Gun
Intel’s disastrous guidance and subsequent stock smash are not just isolated corporate failures; they are macroeconomic leading indicators.
Wall Street priced in a robust, post-pandemic PC upgrade cycle. Instead, they got a consumer base that is locked out by pricing and a shortage of some components.
When the cost of upgrading a bottleneck is a mandatory, overpriced $5,000 system overhaul, the rational consumer response is to sit on your hands.
It’s not just high end computers either. Mine went up by $3,000 but low-to-mid costs went up too, by hundreds.
Intel isn’t just suffering from bad execution; they are running headfirst into a wall of consumer price elasticity. Until enterprise data centers stop sucking all the oxygen—and silicon—out of the room, that wall isn’t moving.
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How likely is that?
MIC AI spend is crowding out private purchases.
Another one of trump’s taxpayer investments. Great call!
Not just computing hardware (which ripples through corporate expenses too)
Electricity, water, and municipal amenities.
And if the prophets have their way, AI will find ways to force a corner on everything.
A computer that worth $2000 is not $5000.
That’s not just overpriced for millions, its ABSURD.
And I’ve zero interest at that price. It’s not a value proposition at all, just laughable.
This AI push has been such a massive mal-investment.
So much so that some of these Tech gurus think RAM shouldn’t be available for the masses.
New flash: ITs the masses that make the productivity gains with RAM, and everything else.
There is such a massive disconnect with reality
Follow the herd:
1) Use a Chromebook with a $30 CPU and 4 GB memdory to surf
2) Upload your photos to the Cloud and tell AI to “fix it and make it wonderful, 5 stars”.
Stop taking jobs away from AI! They need the money to pay the rent!
Mish, im a younger guy and this is basically a slow motion train wreck for a while now…..video cards area luxury item, and game console are now unaffordable. Game consoles now sell more for what they did at launch and this was 6 years ago. I dont know where the breaking point is….but yeah its bad. My suggestion is to wait for black Friday and sign up for notifications for a 16 gig card. Hard drives are also affected and they are in everything. Tariffs are not helping and DRAM is basically a monopoly. The one new chinese company we have as a new entrant is not allowed to sell in USA, further worsening the situation.NVIDIA recently discontinued their best consumer card 5090 so it can be sold to data centers, informed people know this is one big circle jerk with recycled money not unlike the 90s japan bubble.
Normally, when demand forces prices up, that should lead to increased production. However, with quasi monopolies in PC memory industry what are the chances that they like the market as it is?
I game on PC so I’ve been following the hardware price jumps closely. Three years ago I built myself a new high end gaming PC for around $1,700. The same parts would cost me around $3,500 today. 90% of the price increase is from RAM and the GPU. Prices for either are flipping insane even on used market places like eBay.
only 90% increase in 3 years. that’s a flesh wound. /sarc.
we are not in the 9th inning. the game is over and the crowd is pushing and shoving their way out of the stadium to go home. ps i was at the 1969 last world series game of amazing mets. also at the 86 game when Buckner won it for the mets. the parachuter into the stadium i remember the most. i love a mad rush out the doors of stock market. the .com wave was wonderful to ride and bail out when the wave curled……..and crashed on the beach.
I know we have our moments but I’m quite inclined to agree with you here. I didn’t think we’d see this kind of rout in the markets prior to the elections.
aye aye captain. if one gets the direction correct consider that absolute luck. if one thinks they can time when direction changes, they must be tripping on some LSD. the easiest way to trade is trend following with trailing stop losses. more losers than winners that way. keep the losses small. works in bulls and bears. it’s been almost 20 years since any road bump in markets. that’s a long stretch.
With each gigawatt of data center that comes on line, the assault on home computers and the internet increases.
They want total control. It will take a lot to get them all.
Mish you are lucky you at least have your RAM. This clown CEO thinks none of us plebs should have any
https://www.tomshardware.com/tech-industry/data-centers/openai-ceo-says-its-quite-terrible-for-your-pc-to-have-ram-sam-altman-says-data-centers-offer-better-utilization
This is why prices are probably 2-3x what they should be.
wannabe russian oligarchs……..except they are soy boys and nerds and everyone hates them…….since they were children.
The only thing ‘Russian’ about oligarchs is the propaganda.
American oligarchs would be a far more apt term.
correct. in 90s after fall of USSR the oligarchs were sort of heroes. i was there, doing business with one of them and plenty of old russian investment banker pals of mine who had defected in the 80s. met that at columbia u. it was quite amazing to see one of the evil empires of our era, fall and crumble. i suspect we shall see another if we live another 5 or 10 years. perhaps USA or China goes down first. china is rare as she has fallen but risen again about 5 times in the past few thousand years.
The only solution is to integrate a new monetary paradigm of Strategic Monetary Gifting into the present monopoly paradigm of Debt Only thus breaking up that monopolywith a 50% Discount/Rebate policy at retail sale thus doubling everyone’s purchasing power, doubling the potential demand for every enterprise’s goods and services and invalidating The Quantity Theory of Money with beneficial price and asset deflation.
Is that a complicated way of saying that you want the government to subsidize the purchase of new computers? I think the result will be to demonstrate the quantity theory of money, not to invalidate it.
Apparently you didn’t model the policy’s temporal universe effects which enables the individual agent to purchase $100 worth of groceries for $50, a $60k EV for $30k and a $500k house for $250k and yet with the rebate aspect of the policy the merchant gets their full price. Thats a funny kind of inflation. Try to look past your present monetary and economic orthodoxies…its a necessity to perceive a paradigm change…proven over and over again by history.
i have a few little gentleman steak dinner bets with some chums. i say Trump will just wire into everyone’s bank account a large sum. perhaps 100k, or 1 million or 1 billion of computer cursor currency. Covid showed the way. and countless empires and republics and dictatorships have debased their currency by doing similar. my billion dollar zimbabwe note and italian lira, i keep, in my wallet remind me. next to my gold, silver and copper coin.
That is the debt jubilee policy advocated by Steve Keen and others and is a good one-off palliative but doesn’t have the beneficial price and asset deflationary effect that my 50% Discount/Rebate has. Thus it ends up being a half-assed reform that commercial agents would just respond with higer rates of inflation…in the name of “free” market theory…which is just a ruse and a misnomer for having no actual and enforceable barriers, i.e. chaos, which unfortunately closes the minds of libertarians and even liberals who fallen for such fetishized theory.
i tend to agree with all that.
It’s pretty clear Sam Altman is a class A sc*m-bag. He is part of a whole new generation of investors who want take away anything you own and rent it back to you at profit. How is this any different than communism?
Reference my response to Arthur Orwell above. Also communism is oppressive control of industry. This policy BENEFITS commercial agents by doubling the demand for their goods and services. Its a true thirdness/synthesis of a problematic duality.
It’s worse. As you start observing cartels in every industry, you eventually want the government to rule over and “oppress the outrageously wealthy”, rather than the other way around.
Many smart, often white, professionals disagree because the system works pretty well for them and because generations of oligarchs control the press including the history books in public ed. It’s hard to imagine their renditions distort the truth so much as to actually invert it.
So the billionaires and their AI created bubble have effected or will the Neoclouds, Intel, Apple and Google revenue and bottom line.
The oligarchs are beginning to eat their own tail.
Anthropic floats a $1.5 T IPO that doesn’t reflect Q3. Early investors and founders are looking to cash out before the bubble pops. Look for the IPO to be opened to retail investors similar to the boondoggle of SpaceX for those that held onto it.
Facebook will issue more stock thereby diluting retail and institutional (billionaire investors) because one oligarch billionaire doesn’t want to dilute his wealth.
Frontier AI is having its lunch ate by open source AI. More billionaires fighting each other.
Private media is blocking AI or requiring pay to play by AI. Bloomberg, Murdoch, etc., versus Nvidia, Micron, AMD.
As in the runaway cleaning process in the classic Sorcerer’s Apprentice story, this self-feeding recursive process will, if unregulated, continue to accelerate and monopolistically devour resources, from ever-more collateral sources. It is the paperclip problem emerging at the heart of the AI ethos: it will convert the world to paperclips, or whatever its stupid brain hallucinates as success. ,If i recall, it was posed by Jaron Lanier in Who Owns the Future? as talking gizmos everywhere in the middle of scorching water shortages and blight.
A few posts back you asked which inning we’re in as far as the bubble is concerned. I think Intel sliding a cool 30% suggests it’s the 9th. Now the question is: top of bottom of the inning? My guess is bottom, and here’s why:
The circular financing can’t go much longer with interest rates about to hike up, AI isn’t making anything remotely near the magical profits its snake oil salesmen promised, and consumer lockouts are now striking at the actually profitable parts of these businesses. To continue flying much longer would be the defy most other boom bust cycles that meet reality in similar ways.
Intel is down over 90 percent when priced in gold, peak was over 25 years ago.
Good points, as Intel is down 55% from its all time high set this year, and is down 10% from its all time high set in 2000. It seems to be barely sustaining itself in a market where a lot of consumers like me will just buy a brand new $180 HP Chromebook.
By the way, General Electric is nearly at the same stock price it was when Jack Welch retired around 2000, a year before Jack Welch retired. That essentially more than 25 lost years for GE.
I can’t wait for Trump to tell us how much we are winning with his fascist purchase of intel shares; I am really getting tired of winning. Well, I have to admit Trump was right about being tired of winning, winning by his definition anyway.
What a mess
I can remember paying 4800 1995 dollars for a pentium laptop that got so hot it couldn’t be on my lap, and killed the battery in 20 minutes. 16MB ram, 120MB hard drive. I would imagine the machine you looked at probably has the computing capacity of 10,000 of those laptops.
Yes, it’s a lot of money, but you are getting something immensely powerful for it. If cars had followed the same price/performance path, we’d all be driving personal solar spacecraft.
You might also consider getting an 8gb GPU for your existing rig. Probably the biggest possible bang for the buck in terms of speeding up photoshop. If you’re brave, you could probably get a 16gb GPU for $500 or so off eBay.
Except the 8gb GPU is also insanely overpriced. This logic does not follow when the entire market is locked out of buying anything without paying more than it’s worth, hence Intel’s stock crashing.
The price paid is the current worth. It’s not worth it to you, but it is to somebody.
Yes, this.
You would think this logic / rational way of thinking would be encased in every comment submitted within an economics blog.
But not so much here now. Oh, well, maybe again some day
Which is overvalued because the top players are manipulating the market. Openly, even. Glad we’re up to speed on that!
The blatant self-serving and circular financing at play here wouldn’t be an issue if we hadn’t gutted every ounce of regulation stopping companies from crashing our economy on a whim.
The MIC thinks it is worth it, to them. Not just “somebody”.
Planned obsolescence always comes back to bite the ass that made it.
“…. it functions as a regressive tax on hardware buyers.”
Good. Now go and read some studies on the slew of regressive taxes that have been imposed on the poor and the lower middle class for a long time now.
Yes, you can say that again.
It is like natural law is in full force now.
Reap what you sow.
As a tree leans so shall it fall.
Let him who is just be just still, he who is unjust let him be unjust still……
I bought a new set of computers 2 years ago when Microsoft did the Windows 11 update which couldn’t be done on my older computers. I was highly annoyed at the time as the old machines were still functioning ok, although somewhat slow. Looks like it was actually a good thing as I won’t be looking to buy computers for at a couple more years now.
It’s not just computers, check out what is happening to cell phones.
Yeah i replaced my mac book and phone a year or so ago. Following the buy the over kill theory so your not out of date within a year. Glad i did. But it was time. The tech podcast said what was coming. I just wish i had listened to them in 2020. I went as far as researching a chip funds. The one i about pulled the trigger on was 5 bucks a share. Now 55 ish. Oh well
Helium shortage exacerbates all of the chip shortages as fabs are simply running out.
When Iran took out the natural gas trains in Qatar they ensured this shortage would get worse.
One has to wonder what the real cause of the Israeli plant explosion was???
I am hoping to get by with my current computer until there is a glut of memory and GPU. Hopefully that will happen next year.
Most likely 2028. Chinese are ramping up the production of PC memory by 10x in 2026 and 2027. When this mania ends, CXMT will own the consumer PC memory market completely because their cost is lower than every other RAM manufacturer. CXMT expansion is fully paid by the higher prices of RAM. It is extremely capital intensive to build memory fabs but the current prices will fund CXMT expansion. Server memory is more complex and Chinese yields are not comparable to Taiwan fabs but I predict they will catch up in 2027 as they learn from the 10x fab expansion for consumer memory.
Yeah i wonder if those plants biden funded are up and running. Also kind of bad he placed some in states that depend on Colorado for water.
Meh, Biden was smart enough even in his fog not to give out any money until the plants were built. Fabricators were to slow to do anything, then Trump came along.
The end of that rope is in sight.
Chinese tech stocks are suffering.
KWEB, KCAI YTD lows. DRGN delisted. These ETFs are AI related.
Possible causes:
Chip shortages
Cell-phones being used more in place of PCs
Gamesters have systems they are satisfied with
Consumers tapped out
My laptop and desktop are both vintage 2020 and are in no need of an upgrade. CPUs are not the limiting factor for most people and GPUs are a factor only for a few like Mish or cutting edge gamers.
Mine’s vintage 2016. When Windows got too slow I slapped on Linux. Compiling can take awhile, but I don’t do it that often anyway. The letter “e” on the keyboard is getting a little sticky. That will probably get annoying enough eventually I’ll replace the laptop, but after 10 years, even a cheapo will run fine for me.
External keyboard! Good luck.
Cell phone prices skyrocketing too for the same reason as PCs. The AI industry is vacuuming up all the RAM and other components.
The dead give away that Intel was a bad investment idea is that the Trumpster got involved – everything the clown touches turns to crap
Yep he sure is doing it to the country also
Intel still up 3X since USG purchase last year.Wish I had his touch.
The Ballroom will be one for the ages!
I voted for Pedro.
It’ll be interesting come November 17th when NVDA reports earnings. We’ll have 2 weeks to restock our popcorn after election day on November 3rd.
Circular financing reminds me of a turd in a toilet bowl. Yes, it is floating, but not for long.
Circular financing is fine as long as you’re in a very high margin business. Nvidia is the very definition.