By Andrew Moran
Shares of Intel increased by about 30 percent at the opening bell after Nvidia announced a $5 billion investment in the struggling chipmaker on Sept. 18, marking another round of capital injection for the tech firm.
The strategic partnership will see the two tech giants co-develop next-generation data centers and personal computing chips.
Intel will manufacture x86-based central processing units tailored for Nvidia’s artificial intelligence (AI) infrastructure, while also developing system-on-chips that integrate Nvidia’s RTX GPUs to power next-generation computing devices.
Nvidia CEO Jensen Huang says the key objective is to power “a new industrial revolution” by advancing AI applications for both consumers and enterprises.
“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. Together, we will expand our ecosystems and lay the foundation for the next era of computing,” Huang said in a news release.
Lip-Bu Tan, CEO of Intel, says his company’s chip architecture will complement Nvidia’s “leadership to enable new breakthroughs for the industry.”
“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,” said the release.
Nvidia will invest $5 billion in common stock at a purchase price of $23.28 per share.
The arrangement remains subject to regulatory approval.
Wall Street Reaction
Shares of Intel increased by as much as 30 percent at the opening bell, climbing above $30.
After falling to its lowest level in about a decade earlier this year, the stock has rebounded. This year, Intel shares have increased by more than 50 percent.
Intel has been rallying since speculation that the U.S. government would invest in the company. President Donald Trump confirmed in August that Washington would obtain a 10 percent ownership stake, or 433.3 million shares, in the chipmaker, worth $8.9 billion.
Japan’s SoftBank also announced a $2 billion investment in Intel last month.
Shares of Nvidia rose by about 2 percent, adding to its year-to-date gain of about 25 percent. The tech juggernaut recently became the world’s first publicly traded company to reach a $4 trillion market capitalization.
Advanced Micro Devices (AMD) recently saw its shares come under pressure, falling by around 4 percent following the news about Intel and Nvidia.
Ben Bajarin, CEO and principal analyst at market research firm Creative Strategies, likened the deal to Microsoft’s investment in Apple in the 1990s.
“This is good for the whole of the semi industry. Jensen doesn’t do this deal if there is doubt on Intel product roadmap (validates process roadmap) and likely leads to other customers using IFS for process and packaging,” Bajarin said in a Sept. 18 X post.
“NVIDIA is to Intel what MSFT was to Apple in 1997.”
In August 1997, when Apple was on the brink of bankruptcy, Microsoft invested $150 million in its rival. The deal involved Apple designating Internet Explorer the default web browser on Mac computers, Microsoft committing to supporting Microsoft Office for Mac for five years, and a patent cross-licensing agreement between the two companies.
While it was a financial lifeline for Apple, the investment also helped Microsoft avoid accusations of monopolistic behaviors, effectively maintaining a competitive ecosystem.
Meanwhile, according to MarketBeat, Wall Street analysts maintain a “Hold” rating on Intel. Several analysts also recently upgraded their targets for the stock.
Overall, the tech sector is enjoying exceptional capital investments as the industry remains hyper-focused on artificial intelligence, says Bas Kooijman, CEO and asset manager of DHF Capital S.A.
“The sector’s outlook remains buoyed by relentless investment in artificial intelligence. Despite regulatory turbulence, capital continues to flow into AI-driven ventures,” Kooijman said in a note emailed to The Epoch Times.
“Billion-dollar deals remain common in the field as the AI buying spree continues, driving demand for AI companies.”
Meanwhile, investors jumped back into the stock market as the Federal Reserve lowered interest rates at the September Federal Open Market Committee (FOMC) policy meeting for the first time since December. The Fed also signaled two more rate cuts this year. The moves will effectively lower borrowing costs for businesses, allowing companies to invest in growth, research and development, and headcount.
The tech-driven Nasdaq Composite Index increased by more than 200 points, or 1.1 percent, on Sept. 18. The blue-chip Dow Jones Industrial Average added almost 300 points, or around 0.6 percent. The broader S&P 500 rose by about 0.7 percent.
