Intel Shares Surge on Nvidia Investment. Is It Too Late to Buy the Stock?

Group 1: Deal Overview - Intel's stock surged after Nvidia announced a $5 billion investment and partnership, marking one of Intel's best days in years, with a year-to-date stock increase of approximately 50% [1] - The collaboration aims to counteract AMD's growing market share in CPUs and its integration of GPUs and CPUs, particularly in the data center and computer segments [3][4] Group 2: Strategic Implications - The partnership will combine Intel CPUs with Nvidia GPUs using NVLink, providing a powerful integrated option for laptop buyers, while Intel will create custom x86 CPUs for Nvidia's servers [5] - This collaboration is crucial for Intel, which has lost significant market share to AMD in the data center over the past five years, and for Nvidia, which seeks to prevent AMD from gaining further advantages [5][7] Group 3: Financial Context - The $5 billion investment is significant for Intel, which has been facing cash burn while scaling its foundry business, with foundry operating losses of $3.2 billion last quarter [6] - Alongside Nvidia's investment, Intel has secured $9 billion from the U.S. government and $2 billion from SoftBank, creating a $16 billion capital reserve to support ongoing investments [7] Group 4: Challenges Ahead - Despite the positive partnership, Intel's core PC business remains weak, with client computing revenue down 3% year-over-year, and its data center and AI segment revenue grew only 4% [8] - Intel has a history of missing product deadlines and scrapping projects, raising concerns about its ability to execute effectively [9] - Nvidia has clarified that it will continue to rely on Taiwan Semiconductor Manufacturing for its primary manufacturing needs, indicating that Intel's foundry business may not receive the expected support [10][11]