Nvidia finalized the purchase of $5 billion worth of Intel shares on Monday. The American semiconductor firm said in September that it would pay $23.28 per share for Intel common stock.
Nvidia has purchased over 214.7 million Intel shares at the price it set out in the September deal. The firm’s initiative is regarded as a major financial milestone for the company, following years of capital-intensive production capacity expansions that had drained its finances.
Antitrust agencies clear Nvidia’s investment in Intel
The U.S. Federal Trade Commission also announced in early December that U.S. antitrust agencies had cleared Nvidia’s investment in Intel. At the time of publication, the tech giant’s shares had surged more than 1% to $190.53 after the announcement, while Intel’s stock had remained unchanged.
Nvidia revealed that Intel plans to design and manufacture custom data center and client CPUs using the firm’s NVLink. Both companies believe that the initiative will accelerate the deployment of applications and workloads across both enterprise and consumer markets.
The tech giant said the initiative will focus on seamlessly connecting NVLink to integrate the strengths of its AI and accelerated computing with Intel’s CPU technologies and x86 ecosystems.
Intel plans to boost personal computing by building and offering the market x86 system-on-chips (SOCs) that integrate RTX GPU chiplets. The firm also said the new x86 RTX SOCs will power a wide range of computers.
CEO of Intel, Lip-Bu Tan, argued that the company’s x86 architecture has been the foundation of modern computing for decades. He also revealed that the firm is innovating across its portfolio to enable the workloads of the future.
Nvidia purchases a nonexclusive license from Groq
Cryptopolitan previously reported that Nvidia also recently agreed to purchase a nonexclusive license for technology from Groq. The deal is alleged to push Groq’s valuation to around $20 billion. The announcement revealed that the company will hire many of Groq’s key employees.
Groq was last valued at $6.9 billion in a $750 million funding round in September. Truist Securities analyst William Stein argued that the $20 billion valuation is large in absolute terms. He added that the price is higher than Groq’s revenue, which is estimated at between $90 million and $500 million.
The analyst also mentioned that the initiative represents less than 50% of Nvidia’s net cash and less than its expected free cash flow for Q4. Stein believes that Nvidia’s further development of Groq’s technology could make the firm’s capabilities more appealing to high-volume customers.
Nvidia has been involved in multiple deals this year, totaling more than $125 billion. However, despite those deals fueling surging stock prices, doubts have emerged about how the company conducts its business. The firm has been accused of vendor financing, which involves lending money to customers so they can buy the company’s products.
Such deals include Nvidia’s $10 billion annual investment in OpenAI for the next 10 years, which will enable the firm to purchase the company’s chips. The other alleged vendor financing deal is the arrangement with CoreWeave for leasing out Nvidia chips. Nvidia agreed to buy $22 billion of data center capacity from the cloud provider and will receive $350 million in CoreWeave stock.
The tech company has been compared to Lucent Technologies, which aggressively lent money to its customers and overextended itself, unraveling in the early 2000s. Nvidia has refuted the claims of similarity, arguing that it does not rely on vendor financing arrangements to drive revenue growth. Renowned tech investor James Anderson said Nvidia’s deal with OpenAI presented more reason to be concerned about the company than before.
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Source: https://www.cryptopolitan.com/nvidia-invests-5-billion-in-intel/
