Quick Read
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Intel dropped 4% today and 20% over the past month after Elon Musk's Terafab confirmed active talks with TSMC, bypassing Intel's foundry.
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Alphabet tumbled 12% after an $8.7 billion equity loss cut EPS to $2.12 against a $2.97 consensus, while Microsoft slipped despite beating estimates.
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A foundry setback and a rough night for Big Tech earnings are piling pressure on Intel( NASDAQ:INTC ) hours before its own quarterly report. Intel stock is at $92.04, down 4% in recent trading. The slide adds to a 20% drop over the past month, which followed a powerful run earlier in the year.
Intel's decline is steeper than its sector's. The VanEck Semiconductor ETF( NASDAQ:SMH ), a fund concentrated in chipmakers, is at $561.62, down 1.1%. At the same time, the Invesco QQQ Trust( NASDAQ:QQQ ) is at $714.93, down 1.5%, falling harder than the chip fund as Big Tech earnings weigh on large-cap stocks.
Terafab's Talks With Taiwan Semiconductor Cloud Intel's Foundry Story
The latest blow landed on October 29, when Elon Musk's Terafab chip initiative confirmed it's in active discussions with Taiwan Semiconductor Manufacturing about a dedicated fabrication plant to supply chips for Musk's companies. That undermines Intel's earlier positioning as a central foundry partner for the project.
Big outside customers matter because Intel Foundry is still losing money. In Q2 2026, Intel Foundry's revenue rose 31% to $5.76 billion, while the unit ran a $2.1 billion quarterly operating loss.
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Cautious Analyst Previews Set the Stage for Intel's Report
Intel reports Q3 2026 results after the closing bell, a date the company has confirmed. Bernstein modeled Intel's Q4 2026 revenue below Street consensus, citing PC market weakness and estimating third-quarter PC shipments were down 20% to 22% year over year. Wedbush noted that Taiwan Semiconductor may raise prices on its Chip-on-Wafer-on-Substrate (CoWoS) advanced packaging by 10% to 20%, which the firm views as a renewed supply chain constraint and a reduced competitive opportunity for Intel. JPMorgan, which recently upgraded Intel to Neutral, carries an $85 price target that sits below the current share price.
Alphabet and Microsoft Results Drag Chip Stocks Lower
After the close on October 28, Alphabet( NASDAQ:GOOGL ) reported Q3 2026 revenue of $127.58 billion, up 24.6% year over year and slightly missing expectations. Alphabet stock is at $284.82, down 12%. The company earned $2.12 per share, missing the $2.97 consensus, after an $8.7 billion loss on equity securities that Alphabet disclosed reduced diluted earnings by $0.55 per share.
Without that one-time hit, Alphabet's quarter centered on AI demand. Google Cloud revenue jumped 103% to $30.71 billion, helped by sales of its custom tensor processing unit (TPU) systems, and CEO Sundar Pichai said, "We're also seeing strong demand for our TPU systems across a wide range of customers." Spending is the catch: Alphabet's capital expenditures reached $51.36 billion and its free cash flow turned negative at $9.07 billion, renewing worries about AI infrastructure costs (we covered seven suppliers supporting that expansion, from power to cooling, in a free report).
Meanwhile, Microsoft( NASDAQ:MSFT ) stock is at $524.40, down 1%. Microsoft's Q1 FY2027 revenue rose 18.8% to $92.28 billion, and its adjusted earnings of $4.89 per share beat the $4.72 consensus. For Intel, the sore spot is the PC outlook, since Microsoft guided its Windows original equipment manufacturer (OEM) and devices revenue to decline by a percentage in the mid-30s in Q2 FY2027.
Chip stocks including Intel declined on Samsung's profit miss and the heavy capital spending disclosed by Microsoft and Alphabet. That combination leaves Intel absorbing both AI spending worries and a weaker PC backdrop.
Why Intel's Business Model Stands Apart From Google and Microsoft
Intel designs and manufactures its own chips, from Xeon server processors to Core Ultra PC chips, and wants to sell factory capacity on its 18A process to outside customers. Google runs search, YouTube and a fast-growing cloud on TPU silicon it designs in-house for its AI workloads. Microsoft rents out Azure capacity built on third-party graphics processing units and, increasingly, its own chip designs, and it's a potential but unconfirmed Intel foundry customer. In this trio, Intel is the supplier hoping the other two turn into buyers.
What Intel's Q3 Report Has to Prove About Its Foundry
When Intel reports after the close, the key question is whether management can name new outside foundry customers. Intel's Q2 2026 results offer some encouragement, with revenue growing 25.4% to $16.13 billion and data center and AI sales rising 59%. Bearish arguments for Intel center on the Terafab talks, a loss-making foundry unit and a softer PC market. Traders may prefer to keep their exposure smaller until the question of Intel's foundry pipeline resolves.
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