Intel Corporation (NASDAQ: INTC) has been able to do nothing right for far too long. After dominating PCs, laptops and data centers, the lagging processor giant has fallen to the wayside as artificial intelligence is eating the entire computing sector. NVIDIA Corporation (NASDAQ: NVDA) is now the world’s largest corporation by market value, and Intel is even behind on Advanced Micro Devices, Inc. (NASDAQ: AMD) in many aspects of its core market.
There are now two critical developments that have occurred which may finally save Intel’s (assets) down the road. A rapidly crafted governmental stake was a first real boost. A 10% government stake for $8.9 billion made the U.S. government the largest shareholder in Intel.
Now an investment from NVIDIA is the big game-changing event for Intel. It’s going to be a semi-complicated arrangement, but this likely just saved Intel from continuing down its path of irrelevance. Nvidia will invest $5 billion, purchasing Intel’s common stock at $23.28 per share. This deal is the one that ultimately keeps Intel relevant for years into the future.
There is a key caveat here. NVIDIA’s stake may save Intel, but this may not stop any additional disappointments on the part of Intel. And despite a large surge in the stock to back above $30, there are zero assurances that Intel’s stock price cannot regress much lower as well.
As a result of the transaction, the technology and semiconductor companies plan to co-develop multiple generations of custom data center and PC products. Intel’s role will be to build custom central processing units, and NVIDIA will then integrate them into its AI infrastructure platforms to be sold. Another aspect of the new relationship is that Intel will build circuits that integrate Nvidia hardware to power a range of personal computers.
There are some risks here. First and foremost, the investment is subject to customary closing conditions — including required regulatory approvals. Intel’s chip foundry has been lagging and it may be possible that even the might NVIDIA cannot force Intel into being a more prominent and advanced manufacturer.
There is a risk that the NVIDIA stake now puts Intel customers on notice that processors for PCs and servers may now take a backseat to orders driven by NVIDIA. That is purely conjecture at this point, but it does at least pose a potential risk.
Perhaps the one benefit is that this new Intel-NVIDIA partnership might help to bolster Intel’s processors over AMD processors for the coming PC upgrade cycle. Intel will be producing Nvidia-custom x86 CPUs and its x86 system-on-chips that incorporate Nvidia RTX circuits.
WALL STREET SLOW TO OPINE!
CFRA maintained a Hold rating but has decided to raise its 12-month price target to $35 from $24 on Intel. The report said:
On the data center front, NVLink will integrate NVDA’s Arm-based GPUs and INTC’s x86 ecosystem. On PCs, Intel will integrate NVDA’s RTX GPUs with its x86 CPUs. Timing of product releases remains to be seen, but on the surface, the NVDA investment should be viewed as a vote of confidence for INTC investors. The expanded partnership is solely for products, which has completely missed the AI boat, and we question whether this will significantly improve Intel’s data center prospects (NVDA will still push its Arm-based CPU offerings) and drive earnings upside… We would avoid chasing shares.
THE STOCK REACTIONS
The news created some large rifts of haves and have-nots on Thursday. Intel’s stock was up 26.5% at $31.50 on Thursday ahead of the noon hour. This now puts Intel’s stock up 77% from its lows of 2025. Even before noon, Intel’s 275 million shares trading hands was nearly a 3-day equivalent.
The supply-side of the chip equipment and capital spending stocks were also key winners. ASML Holding NV (NASDAQ: ASML) was last seen up 7.4% at $937.00, but on thin trading volume. Applied Materials, Inc. (NASDAQ: AMAT) was up 6.6% at $189.95 and KLA Corporation (NASDAQ: KLAC) was up 8.3% at $1072.00 in late-morning trading.
AMD shares were down by 3.1% at $154.25 on Thursday. Taiwan Semiconductor Manufacturing ADSs were up 1.8% at $277.60. Broadcom Inc. (NASDAQ: AVGO) was last seen flat at $346.17 and Qualcomm Inc. (NASDAQ: QCOM) was last seen up 1.5% at $167.75.
