STORY: Intel shares plunged 12% on Friday (January 23).
Investors sold off after the company struggled to meet strong AI demand for data center chips.
It blamed that on supply constraints.
The firm had also forecast quarterly revenue and profit below market estimates
Market watchers were disappointed as many had bet on Intel's turnaround.
The firm is a latecomer to the AI boom and has finally enjoyed a demand surge.
Consumers want its traditional server chips which are used alongside AI processors in data centers.
Investor interest also grew due to investments in the firm from the U.S. government, Softbank and Nvidia.
Intel's stock outpaced most semiconductor firms last year with an 84% gain.
It extended its rally into this year - and was up close to half this month so far.
But the company couldn't keep up with the demand surge even as it runs factories at capacity.
It also warned a spike in memory chip prices could hurt sales in the PC market.
Its new "Panther Lake" PC chips were expected to spark a comeback after years of market share losses to AMD.
The memory chip surge is driven by growing AI demand.
But Intel said it expects available memory supply to improve in the second quarter.
That after hitting its lowest levels in the first quarter.
