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Intel stock (NYSE: INTC) is trading higher today after Nvidia announced a $5 billion investment in the company. As part of the agreement, Nvidia will acquire common stock and forge a strategic partnership to co-develop products for artificial intelligence (AI) infrastructure and personal computers. This collaboration represents a significant development, particularly given the long-standing rivalry between the two tech giants.
“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,” said Nvidia CEO Jensen Huang.
Nvidia To Invest $5 Billion in Intel
Intel CEO Lip-Bu Tan is also upbeat on the partnership and said, “Intel’s leading data center and client computing platforms, combined with our process technology, manufacturing and advanced packaging capabilities, will complement NVIDIA’s AI and accelerated computing leadership to enable new breakthroughs for the industry.”
He added, “We appreciate 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.”
The Deal Would Put More Cash in INTC’s Coffers
This deal is a substantial lifeline for Intel, which has struggled financially and technologically after missing the shift to mobile computing and, more recently, falling behind in the AI boom. The company posted significant losses last year and in the first half of this year.
For Nvidia, this investment is a strategic power play. It enhances its ability to control more of the computing stack, especially in AI infrastructure, by aligning with the dominant CPU provider. It also reduces reliance on external bottlenecks and gives it greater influence over integrated solutions that combine CPUs and GPUs. By tightly integrating its technology with Intel’s widely adopted x86 architecture, Nvidia strengthens its dominance in the AI market and poses a formidable challenge to competitors like AMD, which has built its market position on strong CPU-GPU integration.
The US Government Also Invested in Intel
Notably, this is the third major investment that Intel has bagged over the last month. In August, SoftBank, which vowed to invest $100 billion in the US over four years following a meeting with Donald Trump in December 2024, said that it would invest $2 billion in Intel at $23 per share.
A few days after SoftBank’s announcement, the US government confirmed that it had acquired a 10% equity stake in Intel, a move that represents one of the biggest federal interventions in a private company since the 2008 financial crisis. The $8.9 billion purchase, which makes the government one of Intel’s largest shareholders, is being funded by converting previously promised grants from the CHIPS Act and the Secure Enclave program into shares.
The government’s equity stake in Intel will be funded by the $3.2 billion awarded to the company as part of the Secure Enclave program, as well as through the remaining $5.7 billion in grants that it was awarded, but not yet paid under the CHIPS and Science Act.
Under the new arrangement, the government acquires 433.3 million shares of Intel at a discounted price of $20.47 per share, a move Commerce Secretary Howard Lutnick hailed as a way to get “equity for the American people.”
Additionally, the government will receive a five-year warrant, at $20 per share for an additional 5% of stake, which would be exercised only if Intel’s stake in its foundry business falls below 51%.
Critics Slam Trump Administration Over Government Intervention in Private Companies
The investment is designed to be passive, meaning the government will not have a seat on Intel’s board or direct control over its decisions. The government has also agreed to vote with the company’s board on most shareholder matters. However, critics argue that this intervention, regardless of its structure, blurs the line between public policy and private business.
Notably, the Trump administration pursued a similar, albeit smaller, path with a “golden share” in U.S. Steel and a stake in MP Materials, which is the only rare-earths producer and processor in the country, signaling a broader intent to create “government-backed national champions” in industries deemed vital to national security.
Intel Is Crucial for the US Manufacturing Ecosystem
Intel is far more than just a chipmaker; it’s a critical component of US manufacturing, economic strength, and national security. As the only leading-edge semiconductor company in the US that both designs and manufactures its own chips, Intel plays an irreplaceable role in the domestic technology ecosystem. This position has become even more vital as the US seeks to re-shore critical manufacturing and reduce its reliance on foreign supply chains.
The ability to manufacture advanced semiconductors domestically is a strategic imperative for the US. Chips are the essential building blocks for virtually all modern technology, from personal computers and smartphones to military hardware and artificial intelligence systems.
Intel is a crucial piece for US manufacturing, especially as demand for AI chips skyrockets amid the AI pivot. That said, the agreement between Nvidia and Intel does not seem to be for manufacturing advanced AI chips for the former. Nonetheless, Taiwan Semiconductor Manufacturing Company – which produces Nvidia’s AI chips – is trading lower today.
Intel Is Working on a Turnaround
Intel, which was once the world’s biggest chipmaker, is now a pale shadow of its glorious past.
A lot went wrong with Intel over the last two decades. It made the strategic blunder of turning down the offer to supply processors for the Apple iPhone. The company believed that Apple might not be able to sell enough of these, and it was a tiny market to bet on.
Intel was relatively slow with innovation, and AMD gradually gained market share in the PC market. Apple, too, stopped using Intel chips for its Mac and instead pivoted to its own chips.
Intel was pivoting to the foundry model and hoped to make chips for other chip designers. However, despite burning billions of dollars on that business, Intel hasn’t been able to secure enough clients for its foundries.
Despite being the biggest beneficiary of the CHIPS Act, Intel wasn’t able to turn the corner, even as the turnaround remains a work in progress. While Intel stock has seen some upward momentum in recent days, it trades at a fraction of its all-time highs, even as Nvidia has become a 4 trillion-dollar behemoth riding the AI euphoria.
Meanwhile, the financial backing from SoftBank, Nvidia, and the US government would be a significant lifeline for Intel and provide the capital and political support needed to accelerate its turnaround plan.