SANTA CLARA, California: Nvidia is throwing a US$5 billion lifeline to longtime rival Intel, buying a significant stake in the struggling chipmaker and agreeing to collaborate on new products that blend Intel's traditional processors with Nvidia's powerful AI chips.

The world's most valuable semiconductor company said this week it will purchase Intel common stock at $23.28 a share, pending regulatory approvals. The deal comes just a month after the U.S. government took a 10 percent stake in Intel to shore up domestic technology manufacturing.

Nvidia CEO Jensen Huang called the partnership "a fusion of two world-class platforms," combining Intel's expertise in conventional CPUs with Nvidia's dominance in graphics processors used for artificial intelligence.

"This partnership is a recognition that computing has fundamentally changed," Huang said. "The era of accelerated and AI computing has arrived."

Intel's shares soared nearly 23 percent on the news, their most significant one-day jump since 1987, while Nvidia's shares rose more than three percent. The surge also lifted the value of the U.S. government's Intel stake to $13.2 billion, up $2.5 billion since Nvidia's announcement.

Intel will design custom chips for Nvidia's AI infrastructure in data centers, while in the PC market, Intel will produce processors that incorporate Nvidia technology.

The deal comes as Intel struggles to recover from years of missteps. Once a Silicon Valley titan, it lost ground after failing to adapt to the mobile era and then fell further behind during the AI boom. Intel posted a $19 billion loss last year and another $3.7 billion in the first half of 2025, and plans to cut its workforce by 25 percent by the end of next year.

U.S. officials invested in Intel last month and said their stake was meant to bolster American chipmaking. Huang stressed that Washington had "no involvement in this partnership at all," though he added that the administration "would have been very supportive."

Intel's new CEO, Lip-Bu Tan, speaking alongside Huang, said he has been in talks with Nvidia since March. "This is a very big, important milestone," Tan said. "I call it a game-changing opportunity that we can work together."

Analysts were upbeat. Wedbush Securities' Daniel Ives said the agreement puts Intel "front and center into the AI game" and caps "a golden few weeks for Intel after years of pain and frustration for investors."

Nvidia, meanwhile, continues to dominate the AI market with its GPUs. Its collaboration with Intel could challenge rivals like AMD, whose shares dipped. The move also has implications for Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia's leading chip supplier, if Intel's foundries eventually begin producing Nvidia chips.

The announcement came during Huang's visit to Britain, where he joined other tech leaders at events with President Donald Trump and Prime Minister Keir Starmer. At a royal banquet, Huang later joked with Tan: "The cognac was excellent, but just not enough of it. I guess the cognac was from 1912."