Intel shares soar as Nvidia embrace brings it into the AI boom

Intel shares have skyrocketed after Nvidia announced plans to invest in and partner with the company, sparking hope that the old chipmaker could avoid being left behind in a world powered by artificial intelligence.

On Thursday, Nvidia said it plans to invest $5 billion in its ailing rival Intel and also help it evolve for an AI-filled future.

“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. Together, we will expand our ecosystems and lay the foundation for the next era of computing,” Nvidia founder and Chief Executive Jensen Huang said in a release.

The deal, subject to regulatory approvals, would give Nvidia about 4% stake in Intel. Intel shares jumped 22%, and Nvidia’s stock price rose 3% on the announcement.

The companies plan to develop chips for data centers and PC products. The collaboration will allow Intel to use Nvidia graphic processors to build a new line of chips for gaming PCs, while Nvidia will integrate Intel’s processors for its new AI data center products.

The companies did not offer a timeline for when the products would go on sale.

Nvidia’s investment follows the U.S. government picking up a 10% stake in Intel in August, a deal brokered by President Trump. Japan’s Softbank also invested $2 billion last month to bolster U.S. semiconductor manufacturing ambitions.

“This is a game-changer deal for Intel as it now brings them front and center into the AI game,” Wedbush Securities analyst Daniel Ives said in a client note. “Along with the recent U.S. government investment for 10% this has been a golden few weeks for Intel after years of pain and frustration for investors.”

Intel was once the most valuable U.S. chipmaker but has lost ground to Nvidia, whose graphics-processing units have become the lifeblood of modern AI applications.

For a long time, Nvidia’s GPUs were used only by gamers for running high-end graphics. Around 2012 they started becoming popular among AI researchers after the chips were used to build a breakthrough image-recognition model.

In 2016, Huang donated one of its first supercomputers, powered by eight GPUs, to OpenAI, which would go on to launch ChatGPT in 2022, marking the beginning of the generative AI boom.

Founded in 1969, Intel was once synonymous with American chipmaking. It powered the PC revolution with its central processing units that went inside all Windows computers.

Over the years, the company stumbled. It missed the opportunity to move into smartphone chips after the introduction of the iPhone in 2007, and Intel later lost its lead in chip manufacturing to Taiwan’s TSMC.

Then came the AI boom, which Intel failed to capitalize on as Nvidia rode its leadership in the GPU market to become the world’s most valuable company, valued at more than $4 trillion.

Intel cycled through three chief executives in the last decade who could not get it back on track.

Lip-Bu Tan, the 65-year-old chip industry veteran who took the reins of Intel in March, acknowledged the missed opportunities and manufacturing delays that have slowed down the company’s growth over the years, and he vowed to strike partnerships to get it back on track.

The collaboration is a shot in the arm for American semiconductor manufacturing ambitions, especially at a time when China is starting to forbid the use of Nvidia’s chips to reduce its dependence on U.S. technology.

The Chinese government has been throwing its weight behind telecommunications giant Huawei to build more semiconductors domestically. On Thursday, Huawei announced the launch of an AI chip that it said would rival Nvidia’s dominance.

The Associated Press contributed to this report.