Nvidia to invest $5 billion in struggling rival Intel

Key Points

• Nvidia is investing $5 billion in Intel to collaborate on AI infrastructure and custom data centers, which may help revitalize Intel's market presence.
• Intel's stock surged by 25% following the announcement, marking its largest one-day gain in decades, while Nvidia's shares rose 2%.
• The partnership involves Intel producing custom chips for Nvidia’s platforms and integrating Nvidia technology into new PC products, aimed at enhancing both companies' technological ecosystems.
• This collaboration comes as China seeks to reduce reliance on U.S. semiconductor technology, which could impact future competitive dynamics in the tech industry.

Nvidia, the world's leading chipmaker, announced on Thursday that it's investing $5 billion in Intel and will collaborate with the struggling semiconductor company.

Nvidia said it will spend $5 billion to buy Intel common stock at $23.28 a share. The investment, which is subject to regulatory approvals, comes a month after the U.S. government took a 10% stake in Intel.

Nvidia CEO Jensen Huang called it “a fusion of two world-class platforms” that combines Intel's strength in making conventional computer chips, known as CPUs, that power most laptops, with Nvidia's focus on the specialized graphics chips that are critical for artificial intelligence.

“This partnership is a recognition that computing has fundamentally changed,” Huang told reporters Thursday. “The era of accelerated and AI computing has arrived.”

Intel shares jumped nearly 23%, its biggest one-day percentage gain since 1987. Nvidia shares added more than 3%.

For data centers, Intel will make custom chips that Nvidia will use in its AI infrastructure platforms. For personal computer products, Intel will build chips that integrate Nvidia technology.

The agreement provides a lifeline for Intel, which was a Silicon Valley pioneer that enjoyed decades of growth as its processors powered the personal computer boom, but fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone’s 2007 debut.

Intel fell even farther behind in recent years amid the AI boom that's propelled Nvidia into the world's most valuable company. Intel lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, and expects to slash its workforce by a quarter by the end of 2025.

U.S. President Donald Trump's administration stepped in last month to secure a 10% stake — 433.3 million shares of non-voting stock priced at $20.47 apiece — making it one of Intel’s biggest shareholders. Federal officials said they invested in Intel in order to bolster U.S. technology and domestic manufacturing.

Of Nvidia’s own Intel stake, Huang said “the Trump administration had no involvement in this partnership at all,” though “would have been very supportive, of course.”

Intel's stock price surge Thursday pushed the total value of the U.S. government’s stake in Intel to $13.2 billion, a $2.5 billion increase from before Nvidia's announcement.

Huang said Nvidia has been in talks with Intel for about a year. Intel CEO Lip-Bu Tan, who joined the press call with Huang on Thursday, said he's been talking to Nvidia since he was named Intel's new leader in March.

“This is a very big, important milestone,” Tan said. “I call it a game-changing opportunity that we can work together.”

The deal is “bullish for U.S. tech,” Wedbush Securities analyst Daniel Ives said in a client note.

Ives said it brings Intel “front and center into the AI game” and, combined with the U.S. government stake, adds to "a golden few weeks for Intel after years of pain and frustration for investors.”

Nvidia, meanwhile, has soared because its specialized chips are underpinning the AI boom. The chips, known as graphics processing units, or GPUs, are highly effective at developing powerful AI systems.

Left out of the celebration Thursday was another U.S. chipmaking rival, Advanced Micro Devices. Shares in the leading maker of both GPUs and CPUs dropped slightly Thursday. AMD, Intel and Nvidia are all headquartered in Santa Clara, California.

The deal between Nvidia and Intel comes as China moves to be less dependent on U.S. semiconductor technology. This week, Chinese officials reportedly forbade several large domestic technology companies from purchasing Nvidia chips, and China-based Huawei announced that it was expanding its development of AI chips and manufacturing.

While Nvidia and Intel will work together to develop new chips, a manufacturing deal has yet to be struck between the two. The potential access to Intel's chip foundries by Nvidia poses a risk to Taiwan Semiconductor Manufacturing Company, which currently manufactures the tech giant's flagship processors. Huang emphasized Thursday that both his company and Intel remain “very successful customers” of TSMC.

Huang has been in Britain on a visit that coincides with Trump’s trip to the country, and he has been attending events with the president along with other Silicon Valley bigwigs.

At a signing ceremony for a trans-Atlantic tech partnership on Thursday with British Prime Minister Keir Starmer, Trump mused that AI was “taking over the world.”

“I’m looking at you guys. You’re taking over the world, Jensen,” Trump said.

Huang and Trump also both attended a royal banquet, prompting the tech mogul to dish about the Windsor Castle event to Intel's CEO in the seconds before their press event.

“The cognac was excellent, but just not enough of it,” Huang told Tan. “I guess the cognac was from 1912.”