Intel (NASDAQ:INTC) shares reached a new 52-week high on Thursday after rival Nvidia (NVDA) invested in a $5B ownership stake in the Santa Clara-based semiconductor firm as part of an agreement to jointly develop custom data center and PC chips.
With Nvidia’s (NVDA) endorsement closely following the U.S. government’s $11.1B investment in the company, Intel’s (NASDAQ:INTC) recent rally has sparked valuation fears among some Seeking Alpha authors, while several others have continued to back their bullish views on the firm.
The Bulls
“The deal boosts INTC’s balance sheet and signals NVDA’s confidence in Intel’s turnaround potential, driving a strong positive market reaction for INTC,” SA Investing Group Leader Jonathan Weber wrote in Nvidia And Intel: Huge Deal, Soaring Price. “If INTC gets back to earning the profits it earned just a couple of years ago, it would be pretty cheap at the $30s level.”
“The collaboration with NVDA is a strong vote of confidence, potentially accelerating INTC’s restructuring and removing negative investor sentiment,” added SA analyst The Asian Investor in Intel Strikes Back With Massive $5B Nvidia Deal. “The deal positions INTC as a renewed AI contender, with further upside possible if the partnership delivers on next-generation Data Center chips.”
“INTC’s turnaround is supported by this partnership, offering upside as hyperscalers invest heavily in AI infrastructure, while NVDA’s dominance is already priced in,” opined Grassroots Trading in 2 Tech Giants, One AI Future: Why Intel, Not Nvidia, Is My Pick Today. “The deal positions INTC to benefit from AI-driven demand for CPUs, improves its long-term outlook, and provides financial stability during its reset.”
The Bears
“While the deal is transformative for INTC’s product business, it still doesn’t resolve its foundry woes with Nvidia holding off on becoming a customer,” argued SA Investing Group Leader Tech Stock Pros in Godfather Of AI Picks Up Intel: Is It Time To Put It Down? (Rating Downgrade). “We like where things are headed for Intel but believe that at current levels, the positives of the deal are priced in for the near term.”
“NVDA’s investment secures a potential second supplier beyond TSMC, but the $5 billion outlay is minor relative to NVDA’s market cap,” added SA Investing Group Leader The Value Portfolio in Intel’s Nvidia Investment Doesn’t Change Things (Rating Downgrade). “Despite U.S. protectionism and strategic stakes, INTC must deliver on advanced nodes to sustain momentum; recent gains warrant caution.”
“Nvidia’s deal offers Intel a lifeline in AI, yet most optimism is already priced in, making the near-term risk/reward unattractive,” noted SA analyst The Techie in Intel’s Nvidia Deal: A Temporary Rally, Not A Turnaround – Downgrading To Sell. “I do think this deal is a win-win for both companies down the road, but I see a higher execution risk for INTC stock after the positives get priced in.”