Intel shares sink 26% following a weak forecast and layoffs

Intel is seemingly losing its once-dominant global position as its shares sank 26% since 1974 on Friday morning. The chip manufacturer suspended its dividend and slashed its workforce. The company lost more than $30 billion in market value after it gave a disappointing forecast and said it would cut 15% of its workforce, deepening worries about its ability to catch up with other chipmakers.

The stock ended the day at $21.48, its lowest since 2013.

"Intel's issues are now approaching the existential in our view," said an analyst.

According to the analyst, Intel could add $40 billion in cash to its balance sheet by the end of 2025 through the moves, as well as subsidies and partner contributions. While Intel's manufacturing setbacks are specific to the Santa Clara, California-based company, other chip makers also sank for a second straight day.

Shares of companies selling equipment used in factories run by Intel and other manufacturers also fell sharply. This sounds alarming for investors as they worry about the pace of future investments in manufacturing infrastructure. Applied Materials, ASML Holding and KLA Corp - all dropped around 8%.

Nvidia dropped almost 2%, with the dominant seller of AI processors down over 20% from its record high close on June 18.

Heightened worries about a recession, along with quarterly reports from Amazon and Alphabet that failed to impress Wall Street, have fueled doubts about the future pace of investment in AI.