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Nvidia Teams Up with Intel: Analysts Remain Unimpressed
Intel (NASDAQ: INTC) has re-entered the spotlight after announcing a $5 billion collaboration with Nvidia aimed at co-developing AI-focused chips for data centers and PCs. The news initially sparked optimism in some corners of the market. However, not everyone is convinced it will move the needle for the chipmaker.
Citi Analyst Downgrades INTC: “No Big Deal”
Christopher Danely, a semiconductor analyst at Citi, recently downgraded Intel to a sell rating, citing limited upside from the Nvidia partnership. In a CNBC interview, Danely shared a sobering perspective on the deal, calling it “no big deal” for Intel’s long-term valuation.
“They gave Intel $5 billion. They’re down to their last $67 billion in cash. I don’t think that’s a big deal,” Danely stated. “Intel is still behind AMD in terms of processors, and if you have a better graphics chip, it doesn’t necessarily help the actual core processor.”
The Citi analyst further explained that while Intel might see $500 million to $2 billion in AI-related revenue from the deal, that contribution could take years to materialize. And for a company generating $53 billion in annual revenue, those figures are unlikely to shift investor sentiment in a meaningful way.
Nvidia and Intel’s AI Partnership Explained
Announced last month, the Nvidia-Intel collaboration aims to integrate Intel’s x86-based CPUs with Nvidia’s powerful GPUs. This joint venture is designed to create advanced AI systems for data centers and potentially expand into consumer PCs.
As part of the deal, Nvidia is also licensing its graphics capabilities to Intel, allowing them to integrate Nvidia technology into their upcoming laptop chips. Intel, in return, may expand its manufacturing efforts under its foundry division.
Despite this synergy, analysts like Danely remain unconvinced that it represents a major turning point.
“This just keeps Intel in this perpetually money-losing foundry business,” Danely argued. “If they got out of that — i.e., stopped making chips for other companies — it could unlock $1 to $2 in earnings power.”
Foundry Business: Catalyst or Burden?
Intel has been investing heavily in expanding its foundry services, aiming to become a major chip producer for third parties, in an attempt to rival the likes of TSMC. However, this ambition has come at a cost.
Critics argue that the foundry division continues to drain cash without delivering meaningful returns. According to Danely, Intel’s insistence on staying in this business may weigh down its financials and distract from its core competencies.
The Nvidia partnership, rather than serving as a breakout opportunity, could reinforce this cycle.
Market Sentiment Divided
The $5 billion figure, while headline-worthy, must be viewed in the context of Nvidia’s balance sheet. With over $67 billion in cash reserves, the investment is minor for Nvidia, suggesting strategic experimentation more than deep commitment.
While institutional investors and retail traders continue to assess the long-term implications of the partnership, short-term sentiment has been mixed. Some see Intel’s engagement with AI leaders like Nvidia as a positive sign, especially as the AI arms race intensifies.
However, others, like Citi’s Danely, stress that performance metrics, competitive positioning, and execution risks remain critical hurdles.
AI Opportunity Beyond Intel?
While Intel’s efforts to position itself in the AI space are notable, some analysts believe better opportunities may lie elsewhere — particularly in companies that are already leading the AI infrastructure race or that stand to benefit more directly from geopolitical trends such as U.S.-China tech tensions and onshoring policies.
Although Intel’s future may be shaped by its AI bets, the current deal, according to skeptics, is not yet transformative.
