Intel Stock Skyrockets After Nvidia Vows To Invest $5B In Chipmaker In Mega Design Deal

The two companies jointly announced the agreement, with Nvidia CEO Jensen Huang calling the deal a ‘historic collaboration’ that ‘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.’

Intel’s stock price skyrocketed in pre-market trading Thursday after announcing a groundbreaking deal in the morning with Nvidia, which plans to invest $5 billion in Intel common stock and jointly develop “multiple generations” of products with the chipmaker.

Intel shares were up more than 29 percent in pre-market trading as of around 8:00 a.m. Eastern Time.

The two companies jointly announced the agreement, with Nvidia CEO Jensen Huang calling the deal a “historic collaboration” that “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,” he said in a statement.

Intel CEO Lip-Bu Tan said that his company’s computing platforms, combined with its process technology, manufacturing and advanced packaging capabilities, “will complement Nvidia’s AI and accelerated computing leadership to enable new breakthroughs for the industry.”

“We appreciate the confidence Jensen and the Nvidia team have placed in us with their investment and look forward to the work ahead as we innovate for customers and grow our business,” he said in his statement.

The joint development efforts will center around using Nvidia’s NVLink interconnect technology to “seamlessly” connect Intel’s and Nvidia’s respective chip architectures, according to the two companies.

This will result in x86-based CPUs from Intel that will be customized for integration within Nvidia’s AI infrastructure platforms for the data center market. For the PC market, Intel will develop x86-based system-on-chips that integrate Nvidia RTX GPU chiplets to “power a wide range of PCs that demand integration of world-class CPUs and GPUs.”

The joint development plans come roughly four months after Nvidia announced it was opening up its NVLink interconnect technology for use by other companies to allow for the development of semi-custom AI infrastructure.

Nvidia will invest $5 billion in Intel common stock at a purchase price of $23.28 per share, according to both companies. They said the investment is “subject to customary closing conditions, including required regulatory approvals.”

Deal Brings Together Longtime Rivals With Vastly Different Fortunes

The blockbuster deal brings together two longtime—and sometimes bitter—rivals in the semiconductor industry that have experienced vastly different outcomes in the face of the fast-growing AI infrastructure market.

Nvidia has ascended to become the world’s most valuable company—at times fighting with Microsoft over the top spot—over the past 15 months thanks to how central its GPUs, computing platforms and software have become to AI applications.

Intel, on the other hand, has suffered over the past several years, with shrinking revenue and market share, as the result of multiple issues, including the company’s failure to develop products that caught traction with AI developers.

The semiconductor giant has also faced multiple years of setbacks in its chip manufacturing operation as rivals like Nvidia turned to contract chipmakers like TSMC that leapt ahead with more advanced technologies.

Nvidia’s successes and Intel’s struggles over the past few years resulted in the former company’s revenue exceeding its rival’s for the first time in 2023. Since then, the gap has widened between the two companies, with Nvidia making $130.5 billion last year, more than double the $53.1 billion Intel brought in for roughly the same period.

Tan Has Made Revitalized Push To Design Custom Chips

Since he became CEO in March to lead Intel’s latest turnaround effort, Tan has pushed several major changes at the company, including a revitalized push for the chipmaker to design custom products for other companies.

In June, Tan hired Srinivasan Iyengar, a former silicon engineering leader at Cadence Design Systems, to boost Intel’s custom chip design efforts as the leader of a new customer engineering center of excellence.

Earlier this month, Tan expanded Iyengar’s responsibilities by naming him the leader of a new Central Engineering Group in which he will “lead horizontal engineering functions and build a new custom silicon business to serve a broad range of external customers.”

“With Srini leading Central Engineering, we’re aligning innovation and execution more tightly in service to customers,” Tan said in a statement at the time.

Nvidia’s $5B Is Third Major Equity Stake Deal For Intel This Year

The announcement that Nvidia plans to invest $5 billion in Intel common stock comes after the U.S. government and Japanese investment giant SoftBank Group made their own moves to gain large equity stakes in the semiconductor giant.

President Donald Trump and Intel announced on Aug. 22 that the U.S. government would gain a 9.9 percent equity stake using $8.9 billion in previously allocated CHIPs and Science Act grants, with the chipmaker calling the deal a “historic” agreement.

The deal came together after Trump met with Tan in the White House earlier this month following the president’s call for Intel’s CEO to resign a few days earlier.

Days before the U.S. government deal was announced, Intel and SoftBank said that the Japanese investment firm will invest $2 billion in the chipmaker’s common stock. This will reportedly give SoftBank a roughly 2 percent equity stake in Intel.