Nvidia CEO Jensen Huang Calls $5b Intel stake ‘an incredible investment’

Wall Street’s main indexes have posted record-high closes a day after the US Federal Reserve delivered a quarter-point interest rate cut, while chipmaker Intel rose after Nvidia decided to build a stake in the company.

Intel clinched its biggest daily gain since October 1987, jumping 22.8 per cent after Nvidia said it would invest $US5 billion ($A7.5 billion) in the struggling US chipmaker.

Nvidia CEO Jensen Huang said that the company’s $5 billion investment and technology collaboration with Intel came after the two companies held discussions for nearly a year.

Mr Huang said he personally communicated with Intel CEO Lip-Bu Tan a “longtime friend” about the partnership, which will see the companies co-develop data centre and PC chips.

The collaboration will combine Intel’s x86 CPUs with Nvidia’s GPUs for AI data centres, and Intel will sell PC chips with Nvidia graphics integrated. Huang said the combined market opportunities are worth $50 billion and that Nvidia will become a “very large customer” of Intel CPUs while supplying GPU technology for Intel’s products.

Intel’s revenue chief Greg Ernst wrote that the transaction took a few months to finalise and was completed last Saturday. Analysts say the partnership underscores how fortunes have flipped between the two Silicon Valley companies, with Nvidia’s market cap now over $4.25 trillion compared to Intel’s $143 billion, thanks to the AI boom that began with OpenAI’s ChatGPT launch.

Peer Advanced Micro Devices slipped 0.8 per cent.

Nvidia rose 3.5 per cent, recovering losses from Wednesday when a report said Chinese tech firms might stop buying its chips.

The moves boosted a broader semiconductor index up 3.6 per cent, and also lifted the tech-heavy Nasdaq and the S&P 500 technology sector up 1.36 per cent.

Seven of the 11 S&P 500 sectors gained.

Meanwhile, the small-cap Russell 2000 index notched its first record high close since November, at 2,466 points.

Small-cap companies are likely to perform better in a low-interest-rate environment.

On Wednesday, Fed chair Jerome Powell emphasised that the softening jobs market was a priority and indicated more reductions could follow at upcoming policy meetings.

“We are looking for support for economic growth and justification of stretched valuations and the prospect of lower interest rates helps that,” said Sam Stovall, chief investment strategist at CFRA Research.

The Dow Jones Industrial Average rose 124.10 points, or 0.27 per cent, to 46,142.42, the S&P 500 gained 31.61 points, or 0.48 per cent, to 6,631.96 and the Nasdaq Composite gained 209.40 points, or 0.94 per cent, to 22,470.73.

The biggest S&P 500 sector decliners were consumer staples and consumer discretionary stocks.

New data showed that the number of people in the US filing new applications for unemployment benefits fell last week but the labour market has softened as both demand for and supply of workers have diminished.

The rate cut is expected to add to Wall Street’s recent rally, boosted by monetary policy easing hopes and a revival of AI-linked stock trading.

Investors are pricing in about 44.2 basis points in cuts by end-2025, data compiled by LSEG showed.

Among stocks, CrowdStrike gained 12.8 per cent after at least nine brokerages raised their price target on the stock.

Shares of Darden Restaurants fell 7.7 per cent after the Olive Garden parent reported weak quarterly results.

Advancing issues outnumbered decliners by a 1.87-to-1 ratio on the NYSE, and by a 2.5-to-1 ratio on the Nasdaq.

The S&P 500 posted 31 new 52-week highs and eight new lows while the Nasdaq Composite recorded 156 new highs and 42 new lows.

Volume on US exchanges was 19.30 billion shares, compared with the 16.67 billion average for the full session over the last 20 trading days.

- With CBNC