Intel shares suffered a sharp sell-off on Friday, plunging 17% to close at $45.07 after the company delivered a softer-than-expected first-quarter outlook and warned that supply limitations could persist despite strong demand from the fast-growing AI data-center market. The drop marked one of the stock’s worst single-day performances in months and reversed much of the optimism that had built around Intel’s recent turnaround narrative.
The semiconductor giant had been one of the market’s more popular recovery plays through mid-January, buoyed by hopes that its manufacturing reboot and AI-focused product roadmap would allow it to regain ground lost to rivals. However, when management acknowledged that production capacity is struggling to keep pace with surging orders for server processors, investors quickly repriced near-term expectations.
Intel projected first-quarter revenue in the range of $11.7 billion to $12.7 billion and guided for break-even non-GAAP earnings. While demand, particularly from cloud and AI infrastructure customers, remains robust, executives conceded that the company underestimated how quickly orders would accelerate, leaving factories stretched and margins under pressure.
The magnitude of the selloff reflects how much optimism had been baked into Intel’s recent rally. Traders had positioned the stock as a beneficiary of the AI investment cycle, especially as its CPUs are widely used alongside Nvidia’s GPUs in data centers. Acknowledging that shipments would be constrained in the near term was enough to disrupt that storyline.
Management indicated that supply conditions are likely to be tightest in the first quarter, with gradual improvement expected later in the year. Still, markets tend to react swiftly when timelines shift, and even a modest delay in meeting demand can translate into reduced revenue and profitability estimates.
A key concern highlighted by executives is manufacturing efficiency, particularly around advanced process nodes. Lower-than-desired yields on Intel’s latest production technology mean that fewer usable chips are produced from each wafer, raising costs and limiting available volumes. For investors, this combination of strong demand but constrained output creates an uncomfortable mix: orders are there, but the company cannot fully capitalize on them yet.
From a market perspective, supply shortfalls often weigh more heavily than demand softness, because they directly cap growth potential and can compress margins. This dynamic helps explain why the stock fell sharply even though Intel’s long-term AI exposure remains intact.
Several analysts argued that the stock’s earlier rally had run ahead of operational realities. While the broader AI server cycle is seen as genuine and powerful, some believe Intel misjudged the scale and timing of capacity needs. As a result, the market is now shifting its focus from long-term potential to near-term execution.
The selloff also underscores a broader theme across technology stocks: investors are becoming more selective, favoring companies that can demonstrate immediate delivery rather than those still working through production or margin hurdles. With multiple mega-cap firms set to report earnings in the coming days, sentiment is increasingly driven by tangible results instead of future promises.
The post Intel (INTC) Stock; Plunges 17% as Weak Outlook and Supply Constraints Spook Markets appeared first on CoinCentral.
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