The company's shares were down 10% in premarket trading after Intel predicted a surprise loss for the period and provided a revenue forecast that was below estimates by $3 billion.
Intel supplier KLA Corp fell more than 5% after its own dismal forecast, while Advanced Micro Devices, Nvidia, Applied Materials and Qualcom lost between 0.8% and 3.2%.
The projections put Intel on track for some of its worst results on record and underscore the challenges facing Chief Executive Pat Gelsinger due to a post-pandemic slump in PC demand and slowing growth in the data center business.
"No words can portray or explain the historic collapse of Intel," said Hans Mosesmann, analyst at Rosenblatt Securities, who was among the 16 analysts who cut their price targets on the stock.
Once the dominant player in both PC and data center markets, the company has been steadily losing share to rivals such as AMD, which has used contract chipmakers such as Taiwan-based TSMC to make chips that outpace Intel's technology.
Some analysts said that puts Intel at a disadvantage even when the data center market bottoms out, expected in the second half of 2022, as it would have lost even more share by then.
"AMD's Genoa and Bergamo chips have a strong price-performance advantage compared to Intel's Sapphire Rapids processors, which should drive further AMD share gains," said Matt Wegner, analyst at YipitData.
Intel's results are also expected to sharply reduce the cash flow available to the company at a time when the CEO is trying to revive the business by expanding contract manufacturing and building new factories in the United States and Europe.
"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," Bernstein analysts said.
(Reporting by Aditya Soni, Nivedita Balu and Chavi Mehta in Bengaluru; Editing by Krishna Chandra Eluri)