Intel stock surges 30% after Nvidia announces USD5b investment
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The news: Shares in Intel surged over 30% on Thursday on news that Nvidia will invest USD5 billion ($7.5 billion) in its US rival, stating that the companies have agreed to co-develop chips for PCs and data centres.
The numbers: Shares in Intel rose above 30% to USD33 per share in premarket trading in New York on Thursday. Nvidia was up 3% on the news.
A press release published Thursday says that Nvidia will invest USD5 billion in Intel’s common stock at a purchase price of USD23.28 per share, subject to customary closing conditions, including regulatory approvals. The figure marks a 6.5% discount to Intel’s closing price on Wednesday.
The context: The companies said that Intel will use Nvidia’s graphics technolog for its data centre products that are built around Nvidia hardware.
In August, the US government agreed to build a roughly 10% stake in the ailing Intel, while Japan’s SoftBank made a USD2 billion investment into the iconic US tech firm. Intel, which has been hit by market share losses and the burden of intensive spending tied to semiconductor production, has also been raising cash by selling assets to investors.
The companies did not disclose a timeline for when the first parts will be available for sale.
What they said: Nvidia founder and CEO Jensen Huang said: “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.”
“Intel’s x86 architecture has been foundational to modern computing for decades — and we are innovating across our portfolio to enable the workloads of the future,” said Lip-Bu Tan, CEO of Intel. “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.”
The sources: Nvidia Intel press release, Bloomberg
