Markets are rewarding investors who bet on a recovery in shares of Intel (INTC) at between $20 - $25. Intel stock jumped by over 30% before settling up by 22.77% on Thursday. It closed at $30.57 after Nvidia (NVDA) announced a major investment in the struggling firm.
Nvidia invested $5 billion in Intel shares, paying $23.28 per share. In addition, it made a deal to co-develop PC and data center chips. The investment very likely casts a support role for Nvidia in the eyes of the White House. The government invested a 9.9% stake in the firm worth $11.1 billion. Both investors – Nvidia and the government – now hold a paper profit on INTC stock.
The pair will use Nvidia’s NVLink to connect Nvidia’s AI and accelerated computing on Intel’s x86 architecture. Intel will supply custom x86 CPUs for the data center.
Setback for Advanced Micro Devices
The deal sets AMD back. Despite AMD having superior graphics chips, CPU, and servers for the AI market, Nvidia will strengthen its hold on those markets.
Intel needed the investment. Without it, the struggling firm would have fallen further behind. Already, Intel is struggling with its Core Ultra processors in the PC market. It does not have a GPU for the PC gaming market to build market share. In the server market, cloud computing firms picked AMD’s server chips over Intel's Xeon line-up of chips.
Intel earns a neutral rating after this development.
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