By Sinéad Carew
NEW YORK, Oct 29 (Reuters) - Chip stocks took another hit after Thursday's weak quarterly earnings report from Intel, which could make for interesting dynamics when trading reopens on Friday.
The semiconductor index sold off in post-close trading on Thursday after chipmaker Intel blamed "near term headwinds across the PC industry," sending its shares tumbling 18% in the after-hours session. That followed the SOX's 1.4% drop during the regular session due to a messy earnings report from
big AI spender Alphabet on Wednesday.
Intel said a factory explosion in Israel will cost it roughly $600 million in lost revenue over two quarters because it has been shut down for about two weeks. Intel's fall took other big chip stocks down in post-close trading as well.
"Overall semis weakness after hours is primarily a function of INTC guide and negative sentiment spillover," said Michael James, equity sales trader at Rosenblatt Securities.
Intel's problems in the PC sector, an area of technology that does not garner the same scrutiny on Wall Street as the AI buildout, does not seem to necessarily mean big problems for other chipmakers that operate more prominently in AI.
Nevertheless, investors in the less-active post-market trade chose to shoot first and ask questions later. AMD dropped 4% and Broadcom fell 2%. Among the biggest losers in the volatile session were the Direxion Daily Semiconductor Bull ETF, which offers investors three times the daily performance of the SOX and was off 9%.
"The revenues missed due to lower PC demand and forward guidance also disappointed. As Google learned today, earnings matter," said Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners LLC. Google parent Alphabet dropped 13% on Thursday.
The SOX has been one of 2026's standout performers, rising more than 60% as shortages of chips and equipment needed for the AI buildout drive up prices and profits at firms ranging from giant Nvidia and memory chip firm Micron to Marvell Technology.
But the momentum of that trade has been tested over the past month by tightening financing terms. That has kept some expected IPOs on the sidelines and put some highly leveraged AI infrastructure firms under pressure. The SOX has declined 13% since hitting its recent high in October and is off 21% from its all-time high in June.
That said, pre- and after-market trading often exaggerates moves relative to those in the more liquid regular session, particularly for stocks affected by a rival's news.
"I think it should not have much of an effect on the market," said Caughey Forrest. "It sounds like it was a PC issue. AMD may be a target for selling tomorrow too. Intel does not have much to do with AI, which is why the market might ignore it."
(Reporting by Sinead Carew, editing by Colin Barr and David Gaffen)
