What Happened?
Shares of computer processor maker Intel (NASDAQ: INTC) jumped 26.6% in the morning session after Nvidia announced a landmark $5 billion investment in the company and a strategic pact to jointly develop new chips.
The groundbreaking deal united two of Silicon Valley's longest-running competitors to create processors for personal computers and data centers. This collaboration was seen as a potential lifeline for Intel, which had been battling declining market share. Under the agreement, Intel will build custom processing units that Nvidia will integrate into its AI infrastructure. The move sent shockwaves through the semiconductor industry, as it posed a potential risk to competitors. For instance, TSMC, which currently manufactured Nvidia's flagship processors, could see that business shift to Intel in the future. Likewise, rival AMD, which competes with Intel in the data center market, saw its shares drop on concerns about the new competitive challenge.
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What Is The Market Telling Us
Intel’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. But moves this big are rare even for Intel and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 4.3% on the news that the company lowered its full-year cost outlook upon completing the sale of a majority stake in its Altera programmable chip business.
The company finalized the sale of a 51% stake in Altera to private equity firm Silver Lake for approximately $3.3 billion, while retaining the remaining 49% interest. As a direct result of this transaction, Intel reduced its fiscal 2025 non-GAAP operating expense forecast to $16.8 billion, down from its previous guidance of $17.0 billion. This strategic divestiture and subsequent reduction in expected costs were viewed positively by investors, signaling a move to streamline business operations and improve the company's financial outlook.
Intel is up 59.1% since the beginning of the year, and at $32.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $644.92.
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