Why Intel Stock Crashed Today

Shares of Intel (NASDAQ: INTC) tumbled on Friday after the semiconductor giant issued a subpar sales and profit forecast and warned of supply disruptions.

By the close of trading, Intel's stock price was down more than 17%.

Image source: Intel.

Supply constraints dented Intel's sales

Intel's revenue declined by 4% year over year to $13.7 billion in the fourth quarter. Falling sales in the company's Client Computing Group, which houses Intel's PC chip design business, offset growth in its Data Center and AI division.

Still, the chipmaker generated adjusted earnings per share (EPS) of $0.15. That was above Wall Street's estimates, which had called for adjusted per-share profits of $0.08.

A disappointing forecast

Investors appeared to focus more on Intel's outlook. Management guided for first-quarter revenue of $11.7 billion to $12.7 billion. The midpoint of that range fell short of analysts' estimates of $12.5 billion.

Intel also expects to break even on an adjusted earnings basis. Consensus estimates had called for adjusted profits of $0.05 per share.

"In the short-term, I am disappointed that we are not able to fully meet the demand in our markets," CEO Lip-Bu Tan said during the company's earnings call.

Cause for concern

Intel's supply shortfalls cast doubt on its ability to wrestle away foundry customers from industry titan Taiwan Semiconductor Manufacturing. That's worrisome, as scaling Intel's chip manufacturing business is a key part of Tan's long-term growth strategy.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.