Nvidia's Intel Deal Disrupting the AI Ecosystem

The partnership between Nvidia and Intel will see collaboration on data centre and PC chip development, the latest major deal behind Intel's turnaround. Micron to report earnings.

The Latest Developments

• Nvidia announced a $5 billion investment into the beleaguered Intel as part of a deal to co-develop chips, after the Trump administration took a 10% stake in Intel.
• The agreement is expected to help Intel catch up in the AI chip market, but it doesn't include Nvidia using Intel's foundries.
• Micron is expected to see its bottom line jump to $2.86 per share, up from $1.18 twelve months ago, amid red-hot demand for memory chips.

Nvidia Shakes Up Markets

On Thursday, as part of a partnership to support its chip-building rival and collaborate on developing chips for data centres and PCs. This comes after Softbank invested $2 billion in Intel, and the Trump Administration took a 10% stake for $8.9 billion, substantially adding to the support Intel has received to turn around. Intel shares jumped 23% following the deal, the best single-day performance since 1987. Nvidia shares were also up, but a more modest 3.5%, a sign that investors in both companies approve of the move.

was whether the deal meant that Nvidia would have access to Intel's foundry but it appears that's not the case. Both companies would collaborate in designing chips, but would likely remain reliant on external foundries. The deal also comes at a pivotal point for Nvidia, as it tries to sell less advanced chips in China. For Intel, the deal could be a lifeline for the company that has fallen behind amid the demand for AI chips, with Nvidia's GPUs being the backbone of developing the most advanced and powerful AI systems. The closer collaboration between the two companies was seen as a blow to rivals AMD and Arm, whose shares suffered in the aftermath of the announcement. Those losses moderated after it became clear that Intel and Nvidia were not yet collaborating on manufacturing chips, but such a deal might be in the future if things work out for the two companies.

AI Driving Growth at Micron

Meanwhile, AI stock Micron Technology is expected to report earnings after the bell on Tuesday, with the per share from $1.18 a year ago. Sales are expected to rise 44% to $11.2 billion, on the back of the AI-driven surge in demand for memory. Analysts suggest that demand for DRAM, which is necessary for AI computing infrastructure, is exceeding demand, which could help the company gain in pricing. The focus will be on the company's guidance for the next quarter to see if its current growth trajectory is sustainable.

Intel Share Price Back to Last Year's Levels

After rocketing higher on Thursday, Intel retraced a bit on Friday amid profit-taking and after the RSI went into overbought territory. A bit of consolidation might be necessary before the stock makes another run at the recent (year's) high of $33.50 per share, with a break above heading to highs not seen since last year at $35.00. On the other hand, a retracement of the recent gains would find support at the confluence of the upper "autotrend" line and the middle Bollinger Band at $25.00 if investors become convinced that the deal isn't worth the hype. Further correction would find support at the August low of $19.20.

Source: SpreadEx | INTEL CORPORATION, Daily