Intel Corp. experienced an extraordinary surge in its share price, rocketing by as much as 28% on Thursday, a rally not seen in nearly four decades. This dramatic boost came on the heels of an unexpected announcement: Nvidia Corp. committed a $5 billion investment into Intel and revealed plans for a joint venture to co-develop chips for both personal computers and data centers. This significant development has underscored the strategic importance of Intel within the semiconductor industry, particularly as it follows closely on the heels of another major financial commitment from the US government.

Less than a month prior to Nvidia’s investment, the US government had finalized a deal to acquire approximately a 10% stake in Intel. Under this agreement, the government pledged to purchase 433.3 million shares of Intel’s common stock at a price of $20.47 per share. Thursday’s stock surge, which saw Intel’s shares peak at $31.79, propelled the value of the government’s stake to an estimated $14 billion, marking an impressive $4.9 billion paper gain since the deal was initially sealed in August. Intel’s filings last month clarified that 274.6 million shares had already been issued to the Department of Commerce, with the remaining 158.7 million shares placed into an escrow account, slated for release to the government over time as the US dispenses funds to Intel under the provisions of the Chips Act.

Nvidia’s investment represents a critical lifeline for Intel, a company that has grappled for years with challenges in its manufacturing operations and struggled to keep pace with the rapidly evolving artificial intelligence sector, which has emerged as the primary growth driver in semiconductors. While the specifics regarding a timeline for the first products resulting from this co-development agreement remain undisclosed, the market’s reaction clearly indicates a renewed optimism. This infusion of capital and collaborative effort is viewed as a strategic maneuver to revitalize Intel’s competitive standing in key technological domains.

The spectacular rise in Intel’s share price has also inflated its valuation to levels reminiscent of the dot-com bubble era. The company is now trading at 57 times its projected 12-month earnings, a peak not witnessed since 2001. Reflecting on this dramatic turnaround, Ted Weisberg, a trader with Seaport Securities, commented on the enduring narratives of companies that overcome adversity, stating, “Wall Street is filled with stories of companies that looked dead but managed to rise like a phoenix from the ashes.” While acknowledging the need for observation, Weisberg concluded, “It is too early to know what this means, we will have to see, but this feels like a breath of fresh air.”