Nvidia can turn market underdogs to kings overnight
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Betting on Nvidia's chosen partners has been a winning trade: Stocks like CoreWeave, Nebius Group and, now, Intel, have soared anywhere from 47% to 370% in the past year.
Why it matters: It pays to follow the money, in this case, Nvidia CEO Jensen Huang's money specifically.
Driving the news: Nvidia will invest $5 billion in struggling rival Intel, subject to regulatory approval.
- This comes after Intel agreed to allow the U.S. government to take about a 10% stake in the firm.
- Nvidia and Intel will collaborate on developing chips for data centers and PCs.
What they're saying: "Look beyond fundamentals" and instead "look at chess moves," Patrick Moorhead, tech analyst and founder of Moor Insights & Strategy, tells Axios.
- Nvidia, "a white knight" and market darling, "taps someone on the shoulder and they instantly become an amazing company," he said.
- To Moorhead's point, Intel soared over 20% off the news, leaving it up more than 50% year-to-date.
Zoom out: This isn't the first time Nvidia's involvement has caused a stock to pop.
- CoreWeave soared after Nvidia took an equity stake in the company.
- Dell has been bundling Nvidia GPUs into its enterprise systems, helping investors categorize it as an AI play.
- Nebius runs solely on Nvidia chips and struck a key AI infrastructure deal with Microsoft, which Moorhead said wouldn't have been possible without Nvidia's blessing.
If Nvidia touches a stock, it tends to turn to gold. But why Intel?
- Moorhead said this is as much about Nvidia trying to strike down another rival, AMD, as it is about a partnership with Intel.
- The fact that Intel is an American chipmaker the Trump administration is hoping will succeed could have just been a cherry on top.
Yes, but: It's unclear whether Nvidia's backing will be enough to turn Intel around.
- Intel does not have its own AI chips and it does not appear that Intel is trying to get Nvidia to commit to using its factories for manufacturing.
- Intel's stock is still down nearly 40% over the last five years, dragged down in large part by its struggling foundry business.
The bottom line: When Nvidia gives a company privileged access to its chips, investment dollars, or public endorsement, markets tend to reward that company, often enthusiastically.
