1 Hidden Benefit of Intel's Deal With Nvidia

Key Points

• Intel and Nvidia will jointly develop PC CPUs that integrate Nvidia's graphics technology.

• Nvidia has been rumored to be working on an Arm-based PC CPU.

• Given the compatibility problems Qualcomm has been having with its Arm-based PC CPUs, Nvidia may be changing course.

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On Thursday, Intel (NASDAQ: INTC) and Nvidia (NASDAQ: NVDA) announced a blockbuster agreement. The two companies will jointly develop data center and PC chips that combine Intel and Nvidia technology. Nvidia will use the data center chips internally, and they'll also be offered to external customers. The PC chips will feature Nvidia GPU chiplets and target a wide variety of PCs.

Intel will manufacture the custom chips, and the deal will likely extend for years, as it will cover multiple generations of chips. On top of the collaboration, Nvidia will invest $5 billion in Intel, taking a sizable stake in the company.

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This deal is huge news for Intel. Not only does Intel presumably gain a foundry customer, which it desperately needs to justify the massive manufacturing investments necessary to scale up its latest process nodes, but it also gets a cash infusion to support those investments.

There's potentially a hidden benefit as well: By teaming up with Nvidia, Intel may have eliminated a potential competitor in the PC market.

Image source: Getty Images.

The Arm intrusion

Up until recently, the PC CPU market was a duopoly. Intel was the dominant market leader, and AMD was the perennial runner-up.

Two things have changed in recent years. First, AMD has staged a comeback and is now a force to be reckoned with. Second, CPUs based on technology from Arm Holdings are starting to infiltrate the market.

The first big break for Arm was Apple's decision to drop Intel CPUs from its Mac products and switch to custom Arm-based chips. Because Apple has tight control over its hardware and the surrounding ecosystem, the transition was relatively smooth.

On the Windows PC side, Qualcomm has been making an Arm-based push in collaboration with Microsoft. Windows laptops powered by Qualcomm's Snapdragon X PC CPUs have been available since 2024, offering exceptional performance and battery life. There have also been plenty of rumors suggesting that other companies are planning to enter the PC market with their own Arm-based chips.

One of those companies is Nvidia. Nvidia has reportedly been working with MediaTek on an Arm-based PC CPU that integrates its graphics and AI technology, although this chip lives purely in the land of rumors right now. There have been some reports suggesting that early versions of the chip struggled with performance, but a later report suggests that the situation has improved.

A potential change in strategy for Nvidia

One possibility raised by the deal with Intel to develop custom x86-based PC chips is that Nvidia might be abandoning its Arm-based PC CPU efforts. While Qualcomm's Arm-based chips offered solid performance, lingering issues with compatibility have limited sales. As of November 2024, Qualcomm had barely made a dent in the market. According to PassMark, which aggregates results of PC performance benchmarks, Qualcomm PCs accounted for just 0.1% of all benchmarks in the third quarter of 2025.

While many Windows applications work without issue on Qualcomm's PCs thanks to an emulation layer, PC games are still problematic. In testing done by PC Gamer earlier this year, the publication found that some games just wouldn't run at all on Qualcomm PCs. In developing its own Arm-based PC CPU, Nvidia likely ran into the same problems.

It's possible that Nvidia will continue to pursue an Arm-based PC CPU in addition to its custom Intel CPUs, but it seems unlikely. PC games will truly "just work" on an Intel CPU, and the path of least resistance for Nvidia to break into the PC CPU market is integrating its graphics technology with Intel chips.

A few years ago, Intel would have likely balked at such a deal. Today, with the company struggling, the deal makes sense for Intel as well.

During a press conference following the deal announcement, Nvidia CEO Jensen Huang said that Nvidia is still committed to Arm, and that its Arm roadmap hasn't changed. However, the company hasn't officially announced anything related to its Arm PC CPU efforts, so it's up in the air whether that rumored product will ever find its way to market.

If Nvidia does give up on Arm-based PC CPUs, one potential competitor for Intel is removed from the equation. AMD is still a huge threat, and other companies could attempt Arm-based PC CPUs. But an Intel CPU with Nvidia graphics could be a killer combination that helps Intel arrest AMD's market share gains. For Intel, this deal could mark a turning point as it attempts to stage a comeback.

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Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Microsoft, Nvidia, and Qualcomm. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.