Intel Could Kill This Business Unit Thanks to the Nvidia Deal

Key Points

• Intel develops its own graphics technology for its CPUs and discrete GPUs.

• The company is partnering with Nvidia to produce CPUs with integrated Nvidia GPUs for PCs.

• With Nvidia now a partner, Intel may end up pulling back on graphics chips to cut costs.

• 10 stocks we like better than Intel ›

Part of Intel's (NASDAQ: INTC) turnaround strategy, now under CEO Lip-Bu Tan and previously under former CEO Pat Gelsinger, is to exit noncore businesses and refocus on what the company does best. Intel has exited the memory chip business, wound down its Ethernet switch business, abandoned its Bitcoin mining chips, and scuttled a wide variety of smaller business lines. It has also spun off its self-driving unit Mobileye and sold a majority stake in Altera, raising cash in both cases.

Intel likely isn't done simplifying its operations. Tan has initiated significant layoffs, and a new policy of "no more blank checks" will lead to the company being far more selective about which investments it chooses to make.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Anything outside of PC central processing units (CPUs), server CPUs, and manufacturing could very well get the axe, and even the manufacturing business isn't safe if it can't secure external customers.

Last week, Intel signed an unexpected deal with rival Nvidia to produce custom PC and data center CPUs that include Nvidia technology. In the PC business, this means that Intel CPUs with integrated Nvidia graphics processing units (GPUs) are on their way. The big question: What does this mean for Intel's own graphics business?

Image source: Getty Images.

An unclear future

Intel sells CPUs with its own integrated graphics technology, and it also broke into the discrete graphics card market a few years ago with its Arc line of GPUs. The first generation of Intel's Arc GPUs was plagued with software issues, while the second generation has garnered positive reviews. Intel focused on the mid-range portion of the market, offering a compelling alternative to Nvidia and AMD graphics cards.

Unfortunately for Intel, it hasn't gained any meaningful share of the discrete graphics card market. In the first quarter, Intel's GPU unit share rounded down to 0%, according to Jon Peddie Research. Nvidia dominates the market, and PC gamers may still be reluctant to try an Intel GPU due to the history of software issues.

The deal with Nvidia doesn't cover discrete graphics cards, but partnering with a competitor raises questions about how serious Intel is about staying in the discrete graphics card market. It also raises questions about whether it will continue to invest in its own graphics technology for its CPUs.

Once CPUs with Nvidia graphics start shipping, it's unclear whether Intel will continue to invest in its in-house graphics. An Intel CPU with Nvidia graphics should be an appealing product, but it could reduce demand for Intel's non-Nvidia CPUs. Intel could also end up scrapping its discrete graphics card business, given that its main competitor is now a partner.

Not without risks

The deal with Nvidia makes a lot of sense for Intel. The company has lost considerable PC CPU market share to AMD, so upping its graphics performance with Nvidia's GPUs should help Intel strengthen its position, particularly in the laptop market.

If Intel ends up pulling back on its own graphics technology, that move would reduce costs at the expense of the company becoming dependent on Nvidia, which is buying a $5 billion stake in Intel as part of the deal, so this appears to be a long-term arrangement. Even so, outsourcing graphics entirely could come back to bite Intel down the road.

Despite the deal with Nvidia, Intel may choose to keep plugging away in discrete graphics cards and to keep developing its own graphics technology. But with the company eyeing noncore businesses to dump, graphics could very well be next.

Should you invest $1,000 in Intel right now?

Before you buy stock in Intel, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intel wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $661,694!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,082,963!*

Now, it’s worth noting Stock Advisor’s total average return is 1,067% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 22, 2025

Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Bitcoin, Intel, and Nvidia. The Motley Fool recommends Mobileye Global and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.