Intel shares surged in premarket trading after Nvidia confirmed a $5 billion investment to co-develop data center and PC chips, marking a major boost for the struggling chipmaker.
Nvidia Joins Intel’s Turnaround Effort
Nvidia announced Thursday it will invest $5 billion in Intel at $23.28 per share as part of a strategic collaboration to jointly develop chips for data centers and personal computers. The news sent Intel’s stock up 30% to around $32 a share in premarket trading.
“This historic collaboration tightly couples NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem , a fusion of two world-class platforms,” Nvidia CEO Jensen Huang said in a statement. “Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
The deal makes Nvidia the latest high-profile backer of Intel, joining SoftBank and the U.S. government, which have both invested heavily in the company in recent months.
Government and SoftBank Backing
Intel’s fortunes, which had sunk to their lowest point in more than a decade earlier this year, began to turn around after receiving fresh support in August. The U.S. government acquired a 10% stake, investing $8.9 billion for 433.3 million shares, a position now worth nearly $14 billion at Thursday’s trading levels.
SoftBank also made a $2 billion investment in Intel that same month, signaling renewed confidence in the company’s recovery prospects.
Key Questions on Manufacturing
While the Nvidia deal represents a significant vote of confidence, analysts remain cautious. “What’s unclear is whether this represents token cooperation intended for political purposes, or if it’s the start of a wider collaboration that would more significantly benefit Intel,” wrote Wolfe Research analyst Chris Caso in a note.
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The agreement, which is still subject to regulatory approval, does not currently include manufacturing Nvidia’s chips at Intel’s foundries , a key factor for future competitiveness. Both Huang and Intel CEO Lip-Bu Tan are scheduled to address the partnership in a press conference at 1 p.m. ET.
Chip Development Plans
Under the deal, Intel will design and build x86 CPUs for Nvidia’s AI infrastructure platforms. On the consumer side, Intel will produce x86 system-on-chips integrating Nvidia’s RTX GPUs to power next-generation PCs.
Nvidia shares also edged higher, gaining around 3% in premarket trading, while Intel’s stock has risen 11% since the start of July, signaling growing investor optimism.
Source: CNBC
