Intel Shares Plunge 25% as AI-Driven Memory Shortage Squeezes PC Business

Intel shares fell as much as 25% in premarket trading on Friday after the company warned that chip shortages tied to the AI boom are damaging its core PC business. Around 7:45 a.m. ET, the stock was set to open at $68.48, down from $92.07 at Thursday's close.

The warning came with Intel's third-quarter results, released Thursday. Revenue reached $16.5 billion, up 20% from a year earlier. The outlook was the problem: Intel guided fourth-quarter revenue to between $15 billion and $16 billion, with earnings per share of $0.25 — half the $0.52 it posted in the third quarter.

What is the mechanism behind the drop?

The AI boom is lifting demand for the memory and server chips used to train and run AI models. That demand has created shortages and pushed memory prices up. Higher memory costs make PCs more expensive to build and buy. Computer-makers respond by ordering fewer Intel processors, and the shortfall lands directly on Intel's largest division.

"The industry continues to navigate one of the most significant supply shortages in history, driven by the unprecedented demand for super intelligence," Intel CEO Lip-Bu Tan said on Thursday's earnings call.

The numbers show the squeeze. Intel's client-computing group, which sells PC chips, generated $8.1 billion in the third quarter, down 9% from the previous quarter. The company expects that division's revenue to fall by more than 20% in the fourth quarter.

What does this change for the PC market?

Intel's forecast implies a broad contraction, not a one-quarter dip. The company expects global PC sales to decline about 12% this year and by roughly another 10% in 2027. Higher memory prices and limited availability are the stated causes.

"We do not expect a sustained recovery until memory availability improves and pricing begins to normalize," said Dave Zinsner, Intel's chief financial officer.

The timing is harsh for Intel's shareholders. The stock had climbed more than 130% since the start of 2026 before the recent reversal, and the rally had already stalled amid a wider sell-off in the technology sector.

Where does Intel still have strength?

The data-center business offered a counterweight. Revenue there rose nearly 80% year over year to $7.3 billion, showing that AI-related demand also works in Intel's favor when it reaches the company's server products.

But Intel cannot fully serve that demand. The company cited a two-week shutdown at its Israeli plant following what Tan called "an unfortunate and tragic accident." Intel expects the shutdown to cut fourth-quarter revenue by about $300 million.

A rough week for tech

Friday's drop did not happen in isolation. The week has been crowded with earnings reports, and several technology firms have delivered disappointing numbers. On Thursday, Google recorded the largest single-day market capitalization loss in its history, shedding $500 billion in value after weaker-than-expected revenue from its AI search tool pushed its shares down 12%.

For Intel, the immediate question is memory pricing. The company's own guidance ties any recovery in its PC business to an easing of the shortage that the AI build-out created. Until then, the fourth-quarter forecast of $15 billion to $16 billion in revenue and $0.25 in EPS stands as the measure of the damage.