Intel shares plunge 28.6%, their worst day since 1974
Intel shares sank 28.6% on Friday, their steepest drop since 1974, as a tech sell-off deepened. Nvidia and AMD also fell and the Nasdaq lost 2.9% amid doubts that huge AI spending will pay off.
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Intel's after-hours slide deepened in regular trading on Friday, with shares of the chipmaker closing 28.6% lower in New York. According to The Associated Press, it was the stock's worst day since 1974. Intel forecast fourth-quarter profit below analysts' expectations, even though results for the latest quarter beat estimates. Chief Executive Lip-Bu Tan said pressure on the PC industry continues.
Intel blamed the AI boom itself in part, saying it is driving up memory chip prices and slowing its key PC market, AFP reported. The sell-off swept the sector. Nvidia fell 4.2% and was the biggest drag on the S&P 500, weighing on the index more than Intel, while AMD was down about 12% during the session, according to AFP. The tech-heavy Nasdaq composite closed 2.9% lower and the S&P 500 fell 1.8%, its steepest drop since June.
The losses reflect growing doubts over whether hundreds of billions of dollars in artificial intelligence spending will generate enough profit to justify it. Google parent Alphabet tumbled more than 12% on Thursday after reporting a larger summer cash burn than in the spring, driven by AI spending. "We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," Joe Tigay, portfolio manager at Equity Armor Investments, said, according to AP.