Intel’s stock surged by 25% early Thursday following the announcement of a substantial $5 billion investment from Nvidia, alongside plans for a collaborative effort on cutting-edge technology for data centers and PCs. This development represents a significant boost for Intel, particularly as Nvidia has become a dominant force in the artificial intelligence (AI) market—a sector where Intel has struggled to keep pace with advanced products.
The strategic partnership fuses the strengths of both companies: Nvidia’s renowned chip designs and Intel’s proprietary x86 architecture. A statement from Nvidia’s founder and CEO, Jensen Huang, highlighted the historical nature of this collaboration, which merges Nvidia’s AI capabilities with Intel’s central processing units (CPUs), leveraging the extensive x86 ecosystem. Huang described the partnership as laying the groundwork for a new computing era.
Stacy Rasgon, an analyst at Bernstein Research, emphasized the dual benefit of the investment, remarking, “Money is helpful, and having Jensen’s blessing is priceless.” This collaboration could pave the way for Intel to revitalize its position in the tech landscape, which has been precarious due to years of declining market share, factory technology issues, and competition in the PC and data center sectors.
Over the past two years, Intel has faced significant challenges, resulting in the loss of over 30,000 jobs since the start of 2024, including around 5,400 in Oregon alone. The tech giant has particularly struggled to compete in the AI chip market, an area where Nvidia has established a clear lead.
While the investment signals Nvidia’s confidence in Intel, it does not necessarily mean that Nvidia will use Intel’s factories for its production needs in the near term. However, the financial commitment could provide a critical impetus for Intel to promote its underdeveloped contract manufacturing capabilities.
In terms of financials, Nvidia plans to acquire Intel stock at $23.28 per share, reflecting a slight discount from Wednesday’s closing price of $24.90. While this move may dilute the value of existing shares in Intel, the immediate market reaction has seen Intel’s stock rise to $31.10, the highest level since July 2024. This increase also positively impacts the $8.9 billion investment from the federal government made last month and a subsequent $2 billion investment from Japan’s SoftBank in August.
With this latest influx of capital totaling $16 billion in recent weeks—alongside $3.3 billion from the sale of a majority stake in its programmable chip business, Altera—Intel appears to have secured its short-term financial stability. Despite this, considerable hurdles remain regarding the development of more advanced chips and attracting clients for its contract manufacturing services. The partnership with Nvidia could play a crucial role in addressing these challenges going forward.
