Intel Stock Rises 25% as Nvidia Invests $5 Billion in AI Chips

Intel (INTC) shares jumped about 25% at Thursday’s market open following Nvidia’s announcement that it will invest $5 billion in Intel, subject to regulatory approval. As part of the agreement, the two companies will collaborate on custom CPU development for data centers and personal computers. Intel’s chips will be used in Nvidia’s AI servers, powering large-scale applications such as ChatGPT and other enterprise AI workloads, marking a significant step in Intel’s efforts to expand its presence in the AI hardware market.

The news marks a strategic shift for Intel, which has been struggling to compete in the AI chip market. As the largest U.S.-based semiconductor manufacturer, Intel is seen as critical to national technology infrastructure. Earlier this year, the U.S. government purchased a 10% stake in Intel, worth $8.9 billion, highlighting the company’s importance for national security and technological leadership. SoftBank also took a $2 billion stake, emphasizing confidence in Intel’s long-term potential.

Intel has historically designed and manufactured its own chips, but in 2021 it opened its fabrication facilities to external customers, allowing other companies to produce semiconductors on Intel’s manufacturing lines. While Intel maintains a dominant CPU business, it has faced challenges in producing AI-focused chips that can compete with Nvidia’s market-leading GPUs. Analysts say this partnership allows Intel to leverage its established x86 CPU architecture while gaining access to the fast-growing AI market through collaboration rather than direct competition.

The Nvidia deal comes amid broader industry developments. Earlier discussions reportedly explored splitting Intel’s manufacturing business to collaborate with Taiwan Semiconductor Manufacturing Company (TSMC), but no agreement materialized. The partnership with Nvidia, combined with government and private investments, positions Intel to remain a key player in AI infrastructure without taking on Nvidia directly.

CEO Lip-Bu Tan, who joined Intel in March, has provided limited details on the company’s AI strategy. However, the Nvidia deal suggests a focus on strategic collaborations that combine Intel’s CPU technology with AI acceleration. Wedbush analyst Dan Ives called the collaboration a “game changer” that places Intel “front and center in the AI revolution.”

Investors responded immediately to the announcement, with Intel shares spiking 25%, highlighting market optimism about Intel’s renewed growth trajectory. The stock’s jump also reflects broader enthusiasm for companies positioned in the AI ecosystem, where collaboration between chip designers and manufacturers is increasingly crucial.

Intel and Nvidia plan to hold a press conference at 1 p.m. ET to provide further details. Nvidia CEO Jensen Huangstated that the partnership “fuses NVIDIA’s AI and accelerated computing stack with Intel’s x86 CPUs,” creating a combined platform that could drive the next generation of AI applications across data centers and consumer PCs.

Analysts say the Nvidia-Intel partnership directly strengthens Intel’s position in AI server markets by combining its x86 CPU architecture with Nvidia’s AI GPU technology. The collaboration allows Intel to produce custom CPUs for high-performance AI workloads, a segment where it has previously lagged behind competitors.

By securing a major AI partner, Intel may also increase demand for its semiconductor fabrication services, attracting new enterprise customers and reinforcing its manufacturing business that opened to external clients in 2021. Market observers note that this deal could shift some AI server production toward U.S.-based facilities, which has strategic importance given current supply chain and national security considerations.

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