Why Did Intel Stock Plunge 8%? Tesla CapEx Cut Sparks AI Chip Demand Concerns

TradingKey - As investments in artificial intelligence infrastructure continue to expand, the market is beginning to scrutinize funding sources and investment returns more strictly. Tesla's lowered full-year capital expenditures, Lam Research's weak earnings outlook, combined with Meta's potential expansion of external financing, have collectively triggered market concerns over the sustainability of AI spending, weighing down the entire semiconductor sector.

On Thursday, Intel (INTC) and Advanced Micro Devices (AMD) both fell by about 8%, Micron Technology (MU) dropped 6.3%, Nvidia (NVDA) fell 4.4%, and SanDisk (SNDK) closed down 8.5%. Losses were even more pronounced in the semiconductor equipment and optical communications sectors, with Lam Research (LRCX) dropping 11.8%, while Coherent (COHR) and Lumentum (LITE) tumbled 12.5% and 11.5%, respectively.

Why Tesla’s CapEx Cuts Are Weighing on Intel Stock

Tesla lowered its full-year capital expenditure forecast from $25 billion to $20 billion in its earnings report, representing a 20% reduction. Company CFO Vaibhav Taneja stated that the move is aimed at managing capital allocation more efficiently.

Capital expenditures cover long-term assets including data centers, chips, manufacturing equipment, and production facilities. Tesla is currently pushing forward with its Robotaxi, FSD, Optimus humanoid robot, and Terafab chip projects, which is why it was previously seen by the market as a major source of incremental AI chip demand. With the company now proactively cutting its annual spending target, investors are concerned that other major tech firms might also tighten their budgets, potentially affecting the entire semiconductor supply chain.

While Intel has yet to become a dominant player in the AI accelerator market, it is expanding its advanced nodes, server chips, and foundry business, which requires sustained heavy investment. If the market lowers growth expectations for the AI hardware sector, Intel—given its high capital intensity and cash flow that remains in a recovery phase—typically faces more pronounced valuation pressure.

However, Tesla's reduction in capital expenditures for the year does not necessarily mean its AI initiatives have cooled down. JPMorgan suggests that some investments may simply be deferred. As Robotaxi, Optimus, and Terafab enter larger-scale construction phases, Tesla's capital expenditures could rise again in 2027 and 2028.

Lam Research Outlook and Meta Financing Fuel AI Investment Concerns

The performance outlook from semiconductor equipment maker Lam Research also amplified market caution. The company stated that short-term supply chain constraints would impact revenue for the December quarter, issuing a forecast below market expectations that sent its stock tumbling 11.8%.

As equipment makers operate upstream in the semiconductor supply chain, their order volumes and revenue outlooks are typically used to gauge foundries' future expansion plans. The cautious signal sent by Lam Research raised investor concerns that chipmakers' capital expenditures might temporarily slow down, putting simultaneous pressure on Intel, AMD, Nvidia, and memory stocks.

Meanwhile, Meta announced plans to create a new share class, providing greater flexibility for future fund-raising through stock issuances. Evercore ISI noted that Meta may consider both debt and equity financing over the next 3 to 6 months.

This arrangement touches on another sensitive issue within the AI investment boom: whether data center construction can continue to rely on external funding.

If companies' operating cash flows are insufficient to cover spending on chip procurement, data centers, and energy infrastructure, they will need to continually issue debt or equity. As financing costs rise, companies may scale back or delay certain projects, thereby impacting orders for GPUs, server processors, memory chips, and optical communication equipment.

Intel's Long-Term Technology Strategy

Amid short-term stock price pressure, Intel continues to map out a longer-term semiconductor technology roadmap. The company expects that future chips will not rely solely on shrinking transistor sizes, but will instead boost compute density per unit area through vertical stacking.

Transistors have already evolved from planar structures to FinFET and gate-all-around (GAA) technologies, and the next stage could enter the era of complementary field-effect transistors (CFET), stacking N-type and P-type transistors vertically. Metal interconnects will also become increasingly three-dimensional, thereby shortening data transmission distances and improving computational efficiency.

However, translating these technologies into revenue still requires addressing challenges such as heat dissipation, mass-production yields, and equipment supply. Limited output of EUV lithography machines and long lead times could constrain the expansion speed of advanced chip capacity. Intel plans to increase equipment reuse across different process nodes to reduce capital expenditure and shorten upgrade cycles, though the actual effectiveness remains to be verified by customer orders and mass-production progress.