AMD Advanced Micro Devices (NASDAQ: AMD) shares fell 5% on Thursday following the announcement of a $5 billion alliance between Intel (NASDAQ: INTC) and NVIDIA (NASDAQ: NVDA). The two companies will collaborate to create custom CPUs and chip platforms for artificial intelligence and personal computing markets.
As part of the agreement, Intel will produce x86 CPUs tailored for NVIDIA’s AI systems. The move positions Intel to strengthen its role in high-performance data centers, an area where it has lagged behind competitors. NVIDIA will also work with Intel to integrate its RTX GPU chiplets into Intel’s system-on-chip products. This development directly challenges AMD’s presence in both server and PC markets.
Intel stock shot up over 30% on the news, and NVIDIA rose by 0.52%. AMD stocks, however, were put under pressure as analysts considered the weight of this new partnership.
Research firms issued differing views on the competitive impact. Lynx Equity described the development as “clearly a negative for AMD,” pointing to Intel’s plan to revive a previous project to pair x86 CPUs with NVIDIA GPUs. According to the firm, this could undermine one of AMD’s strengths: combining x86 CPUs with GPUs in data centers.
Lynx also warned that the partnership could affect the PC market. Intel’s advanced packaging technology may allow it to deliver products faster, potentially reversing AMD’s recent share gains in consumer computing. NVIDIA’s brand recognition in graphics further intensifies this risk.
Stifel, however, assessed the impact as a “modest negative” for AMD. The firm noted that Intel and NVIDIA will need time before new products reach the market, which provides AMD with room to protect its current positions. Stifel also emphasized that AMD continues to benefit from its competitive pricing and established customer base.
Bank of America brought a new angle, indicating that the developmental aspect might not give as much weight to AMD as others are afraid of. The company mentioned that increased integration of x86 architecture into the enterprise systems would also indirectly help AMD. Analysts also noted that Intel can struggle with execution issues since it needs to strike a balance between NVIDIA, SoftBank, and government stakeholders.
Although partnering with AMD poses strategic risks to the company, the analysts do agree that the effects of the partnership will be felt only years later. Meanwhile, AMD still has opportunities regarding the growth of AI, CPU market share, and the competitiveness in desktop graphics in the near future.
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