Nvidia Invests $5B in Intel, Teaming on Custom Chips

On September 18, Nvidia announced a $5 billion investment in Intel, making it one of Intel's largest shareholders with a stake of about 4% or higher. The news sent Intel's pre-market stock soaring by nearly 30%.

This move comes shortly after Intel secured $5.7 billion in U.S. government funding and $2 billion from SoftBank, marking another major capital boost. Since taking the helm in March, new CEO Lip-Bu Tan has been steering Intel through a strategic transformation, and Nvidia's investment is seen as a strong vote of confidence in that direction.

Under the agreement, Nvidia and Intel will co-develop custom CPUs and AI GPUs for data centers and PCs, connected through high-speed interfaces. Notably, the partnership does not involve Intel's foundry business. Nvidia is purchasing Intel shares at $23.28 each — slightly below the previous day's close but above the price set for the U.S. government's stake.

A highlight of this collaboration is the plan to deliver custom data center processors and AI chips that could give both companies a competitive edge over rivals like AMD and Broadcom. In consumer electronics, Nvidia will also design exclusive custom graphics chips for Intel, strengthening Intel's position against competitors.

Nvidia CEO Jensen Huang described the collaboration as a deep integration of two world-class platforms, aiming to expand ecosystems and lay the foundation for the next era of computing.

However, the deal may signal longer-term risks for TSMC, which currently manufactures Nvidia's flagship processors. If Intel eventually takes over part of that business, TSMC's market dominance could face pressure. Following the announcement, Nvidia shares rose over 3%, while AMD fell nearly 4% and TSMC dropped about 2%.

Industry watchers see this as Nvidia's effort to diversify investments in the U.S. and strengthen ties with the government. Intel CFO David Zinsner emphasized that the company is in a "strong cash position" and doesn't foresee the need for major new financing until next-gen manufacturing ramps up.

While Nvidia has been expanding into the CPU market, Intel has been pushing its own AI chip portfolio. Both companies confirmed that this partnership does not alter their existing product roadmaps but will span multiple product generations, with release timelines yet to be disclosed.