Nvidia and Intel made history on Thursday, Sept. 18 when the two giant chip companies announced a tie-up that caught Wall Street by surprise. Nvidia (NVDA) will make a $5 billion investment in Intel (INTC) stock, and together, the two companies will develop data center and PC products that executives promise will usher in “the next era of computing.”
But for many investors, perhaps more interesting than the specifics of the deal is what Intel CEO Lip-Bu Tan and Nvidia CEO Jensen Huang had to say about the partnership.
Huang is considered one of the greatest execs in business, with Nvidia’s stock up 1,272% over the past five years and its GPUs powering artificial intelligence as we know it. Tan is new in the job, having taken over from Intel icon Pat Gelsinger in a desperate attempt to turn the company around. Intel stock is down nearly 41% over the same time period.
For Tan, this announcement with Nvidia, which came just days after President Donald Trump announced that the U.S. government would take a stake in Intel, is a real win. It’s also a huge vote of confidence in Tan’s turnaround capabilities from the well-respected Huang.
Acknowledging that, Tan said “I’d like to thank Jensen for the confidence in me. And then our team and Intel will work really hard to make it a good return for you.”
Tan also shared that the deal was announced on the six-month anniversary of his debut in the chief executive role.
Huang also offered up some kind words, acknowledging that the two companies had worked closely on the deal for about a year.
“I’m delighted to partner with Lip-Bu Tan, a long-time friend and many of my colleagues at Intel in this great partnership, this historic partnership.”
So what comes next?
Those bullish on Intel largely believe that Huang’s shot in the arm and cash from the Trump admin will help Intel power through its slump and come out stronger. One of the main goals is for Intel to stabilize its foundry business and turn it profitable.
However, at least for now, converting Nvidia into an Intel foundry customer appears to be off the table. Huang said “we’ve always evaluated Intel’s foundry technology, and we’re going to continue to do that. But today, this announcement is squarely focused on these custom CPUs.”
Bulls might not be getting everything on their wishlist, but INTC stock has popped 16% in the last month thanks to all of the positive news. Plus, Lip-Bu Tan just had a heck of a first six months, perhaps creating a “new era” of leadership for the once-iconic chipmaker.
