Background and Nvidia investment
Intel is under pressure and has seen its share price fall sharply, but Nvidia is now investing USD 5 billion and is working with Intel on chips for PCs and data centers, especially for AI applications.
Following the announcement, Intel shares rose by 25 percent - the strongest rise in decades.
The cooperation reduces risks for Intel, for example due to the high level of competition with AMD and the previous dependence on customers from China, Europe and Taiwan.
Effects on the competition
The deal is challenging for AMD, as the cooperation between Nvidia and Intel weakens AMD's market position in the server chip business.
Nevertheless, AMD remains technologically competitive, especially in modular chip architectures, and has customers such as Meta for their data centers.
Nvidia benefits strategically as it will be closer to the US market and less dependent on TSMC and chip production in Taiwan in future - this reduces geopolitical risks.
Fundamental key figures and outlook
Intel has shown major weaknesses, such as stagnating sales (approx. USD 50 bn) and a lack of profit.
Nvidia is significantly larger and more profitable; the Nvidia investment is small for Nvidia, but an accolade for Intel and an enormous strategic plus.
Valuation
According to Kuhnert, Intel's stock market value after the increase does not yet sufficiently reflect the potential; the deal is actually worth more to Intel than the 30% increase in the share price to date.
There are risks in terms of competition law (monopoly position for Nvidia), but the current focus is on national security, which is hampering regulatory intervention.
Analysts expect a setback of around 10% for Intel, while prices of USD 220-240 are forecast for Nvidia over the next 12 months.
Intel is seen as an interesting normal portfolio addition, especially for long-term investors and as a hedge against geopolitical tensions, e.g. around Taiwan.
Nvidia remains the favorite in the AI megatrend, Oracle is another example of growth in the cloud and AI sector.
Conclusion
The Nvidia deal provides Intel with new opportunities for a turnaround and strengthens its position in technology and AI.
The share is volatile in the short term after the recent rise, but offers long-term potential, especially for investors with an eye on AI, robotics and security risks in the chip sector.
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