Intel (INTC) shares surged as much as 25% in early trading Thursday after Nvidia (NVDA), the world’s leading maker of AI chips, announced a $5 billion investment in the struggling U.S. semiconductor giant — a deal that could reshape both companies’ roles in the data center and PC markets.
In a press release Thursday, Nvidia said it would buy $5 billion of Intel common stock, pending regulatory approvals. The purchase amounts to roughly a 4% stake in Intel and follows a flurry of outside investments in the company, including $9 billion from the U.S. government in August and a $2 billion infusion from SoftBank Group (9984.T) earlier this year. All told, Intel has attracted about $16 billion in new external capital since summer.
As part of the agreement, Intel and Nvidia said they will co-develop “multiple generations” of custom data center and personal computer products. Intel will design and build CPUs based on its x86 architecture to be integrated into Nvidia’s AI servers — the backbone of applications such as ChatGPT — giving the Santa Clara, California–based company a new role in powering the AI boom. Notably, the deal does not include Intel’s troubled contract manufacturing, or foundry, division.
The announcement instantly reignited speculation about Intel’s place in the AI arms race. Once the dominant U.S. chipmaker, Intel has been steadily losing market share to Nvidia and other rivals in both high-performance data center chips and advanced manufacturing. Its foundry unit, launched in 2021 to compete with Taiwan Semiconductor Manufacturing Co. (TSMC), has yet to meet expectations. Earlier this year, reports surfaced that the Trump administration explored splitting Intel’s manufacturing business and handing it to TSMC — a deal that never materialized but underscored how vital Intel is seen to U.S. national security.
The company is also undergoing major internal changes. New CEO Lip-Bu Tan, who took over in March, offered few details about Intel’s AI roadmap in its most recent earnings call, when it announced plans to cut 15% of its workforce and cancel proposed plants in Europe. Thursday’s deal with Nvidia suggests Tan may be pivoting away from competing head-on with AI chipmakers and instead leveraging Intel’s still-dominant CPU business as a partner to them.
“This is a game changer deal for Intel as it now brings them front and center into the AI game,” Wedbush analyst Dan Ives wrote in a note Thursday. Bernstein analyst Stacy Rasgon was more cautious, noting that the deal doesn’t address Intel’s core manufacturing challenges. “Intel can use the help on the product business just as much given share position in key markets has been bleeding,” Rasgon said.
Intel recently said it would only proceed with its next-generation 14A manufacturing process — intended for cutting-edge chips — if it could secure anchor customers. While the Nvidia partnership will bolster Intel’s CPU relevance, it won’t immediately fill its foundry pipeline.
For Nvidia, the deal expands its reach into traditional computing while deepening its ecosystem. “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.”
Intel and Nvidia plan to hold a joint press conference at 1 p.m. ET to discuss the agreement in more detail.
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