INTC: Intel Stock Rockets 30% on $5 Billion Nvidia Investment. PCs, Get Ready for AI?

Pair of tech companies will work together to develop data center and personal-computing products.

🚀 Intel Shares Rally 30%

• Intel stock INTC soared more than 30% from the get-go Thursday after Nvidia NVDA said it will invest $5 billion in the embattled US chip maker. Shares of the AI king popped 3% to kick off the cash session.
• According to Nvidia’s press release, the company will buy $5 billion worth of Intel shares at $23.38 a piece. Intel opened Thursday’s trading at $32 a piece. The two will be collaborating on building data-center and personal-computing products, mainly chips, of course.
• Why is that such a big deal? The $5 billion injection could be the start of a partnership between two of Silicon Valley’s biggest rivals. It could also mean that, in time, Nvidia could relocate a chunk of its manufacturing to Intel.

💡 What’s the Deal About?

• According to the deal, Intel will build custom data center central processors and then Nvidia will package those with its AI chips, or GPUs.
• They’ll also be running a separate gig to jointly develop PC chips. Is this the start of AI getting infused into consumer PCs? The current collab’s terms don’t say if AI will be integrated into Intel’s or Nvidia’s chips.
• What it discloses is that Nvidia will provide the graphics chips that then Intel can package with its PC central processors.

💪 Intel in Need of Saving

• It’s another lifeline for Intel and it comes a month after the US government agreed to purchase a 10% stake in the struggling American chip maker. Other notable backers include Masayoshi Son’s SoftBank 9984, which recently purchased shares worth $2 billion.
• Intel is one of the veteran hardware companies that didn’t catch the AI wave at all. From the start of last year, shares of the company are lower by 50% (pre-jump), indicating how bad its situation is.
• It’s also losing billions of dollars each year. For the second quarter, Intel realized a loss of almost $3 billion.

💬 Word from the Two Bosses

• Nvidia CEO Jensen Huang praised the agreement, saying it’s a “historic collaboration,” and a “fusion of two world-class platforms.” “Together, we will expand our ecosystems and lay the foundation for the next era of computing,” he added.
• Intel CEO Lip-Bu Tan said the company “appreciates 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.”