Nvidia to Invest $5 Billion in Intel — The Lifeline Could Save Intel but Alienate Its Own Partners

TradingKey - Following the U.S. Trump administration’s “national equity stake” initiative, struggling semiconductor giant Intel (INTC) has received another major boost: Nvidia (NVDA), the global leader in AI chips, will invest $5 billion in Intel — not only buying shares but also entering a strategic partnership to jointly develop multiple generations of data center and PC products.

After the announcement, Intel’s stock surged 30% in pre-market trading on September 18, while Nvidia rose over 3%.

At the same time, Arm, Nvidia’s CPU partner, fell 5%; TSMC, the manufacturer of Nvidia’s chips, dropped over 3%; and AMD, Nvidia’s key chip competitor, declined about 6%.

One month ago, the U.S. government acquired a 10% stake in Intel through its “subsidies for equity” program — injecting new life into the long-struggling semiconductor company.

However, this move, which cost the government almost no additional funds, was seen by many as merely a government endorsement. Market participants widely hoped to see real capital commitments and new customer partnerships.

The Nvidia-Intel agreement marks the latest sign that such momentum is materializing. Under the deal, Nvidia will purchase Intel shares at $23.28 per share, resulting in an ownership stake of approximately 4%.

Hargreaves Lansdown analysts noted that the real value of the deal lies not in the capital itself, but in the strategic credibility and influence Nvidia brings to Intel — both financially and strategically.

However, the transaction still requires regulatory approval and satisfaction of customary closing conditions. Additionally, the agreement does not include terms for Nvidia to transfer its chip manufacturing operations to Intel.

B. Riley Wealth analysts pointed out that while regulatory clearance is needed, the deal does not necessarily mean Nvidia will produce its current GPUs at Intel’s upcoming fabs — it will likely continue partnering with TSMC. Still, this move represents a step in the right direction for U.S. semiconductor manufacturing.

Analysts say Intel desperately needs a strong partner to counter investor skepticism about its future and its ability to regain relevance in the AI era — and Nvidia is the ideal candidate.

For Nvidia, there may be an unexpected benefit: political goodwill. As Hargreaves Lansdown noted, the deal has limited financial impact on Nvidia but offers significant political upside — aligning with U.S. policy goals and potentially helping persuade the U.S. government to ease restrictions on advanced chip exports to China.

Meanwhile, the powerful alliance between two of Silicon Valley’s oldest rivals has sent shockwaves through the broader semiconductor industry.

With Nvidia’s backing, Intel’s growth trajectory could shift positively, posing a threat to competitors like AMD, which also supplies chips for data centers, as well as Broadcom.