Nvidia is investing $5 billion in Intel stock, a 4% stake.
Intel (NASDAQ:INTC) stock got a jolt Thursday after it struck a deal with rival chipmaker Nvidia (NASDAQ:NVDA).
In this deal, Nvidia will invest $5 billion in Intel stock, which amounts to a roughly 4% stake. In addition, the two semiconductor leaders will collaborate to jointly develop data center and PC products for hyperscale, enterprise and consumer markets.
While the two companies are rivals, they operate in different areas of the chipmaking world. Intel is the market leader in CPU (central processing unit) chips while Nvidia is the leader in GPU (graphics processing units) chips.
Specifically, the partnership involves connecting Nvidia and Intel architectures using Nvidia NVLink. This integrates Nvidia’s AI and accelerated computing with Intel’s CPU technologies.
- For data centers, Intel will build Nvidia-custom x86 CPUs that Nvidia will integrate into its AI infrastructure platforms and offer to the market.
- For personal computing, Intel will build and offer to the market x86 system-on-chips (SOCs) that integrate Nvidia RTX GPU chiplets. The new x86 RTX SOCs will power PCs that demand integration of CPUs and GPUs.
Intel’s x86 architecture has been foundational to modern computing for decades — and we are innovating across our portfolio to enable the workloads of the future,” Lip-Bu Tan, CEO of Intel. “Intel’s leading data center and client computing platforms, combined with our process technology, manufacturing and advanced packaging capabilities, will complement NVIDIA’s AI and accelerated computing leadership to enable new breakthroughs for the industry.”
Second big Intel deal in recent weeks
Both stocks were surging on Thursday, but Intel got the bigger boost, rising about 28% to $33 per share. Nvidia stock jumped about 4% to over $170 per share.
It comes just a few weeks after the U.S. government invested $8.9 billion in Intel stock, representing a roughly 10% stake. The money comes mostly from unpaid funding allocated to Intel from the Chips and Science Act. Nvidia officials said the Trump Administration had no involvement in this deal, according to the Fly.com.
The two major investments have lifted Intel’s stock price by about 31% in the past month and 55% year-to-date (YTD).
Intel, a pioneer in the field of semiconductor field, had fallen behind in recent years in making AI-enabled chips – a void that Nvidia filled. As a result, its stock price has plummeted with an average annualized return of -9% over the past five years. But analysts see this as a major step forward for Intel.
“This is a game changer deal for Intel as it now brings them front and center into the AI game,” technology sector analyst Dan Ives wrote in a research note, according to NBC News. “Along with the recent U.S. Government investment for 10% this has been a golden few weeks for Intel after years of pain and frustration for investors.”
For Nvidia, this news comes days after the Financial Times reported that China had banned Chinese companies from buying Nvidia’s AI chips to boost domestic production.
