Why Intel Stock Just Dropped
Key Points
Nvidia and Microsoft are teaming up to "reinvent the PC."
New CPUs from Nvidia will challenge Intel in both PCs and data centers.
Turnabout, it seems, is fair play -- especially for tech stocks.
For the past few months, one of the biggest stories in artificial intelligence has been the dramatic turnaround in Intel (NASDAQ: INTC) stock as the AI economy began shifting from questions of "how do we train up large language models (LLMs) quickly?" (i.e., AI training) to "how do we get LLMs to answer questions quickly?" (i.e., AI inference).
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The answer to the first question generally involved paying exorbitant prices for Nvidia (NASDAQ: NVDA) GPUs, while the latter increasingly centered on switching to CPUs -- which Intel just happened to be pretty good at building. For a time, this shifted the momentum away from Nvidia stock -- up 18.4% year to date -- and toward Intel stock, which is up 192% so far this year!
But today Intel stock is down 6.2% through 10:15 a.m. ET -- and Nvidia is the reason.
Image source: Getty Images.
Nvidia's big CPU news
Nvidia announced today that it is building a new "superchip" called the RTX Spark, featuring a new N1X CPU that it will debut across a whole line of laptop computers from Microsoft (NASDAQ: MSFT), Dell (NYSE: DELL), HP (NYSE: HPQ), ASUS, Lenovo, and MSI. Nvidia has also shifted into full production of its new Vera CPU, which will be used for inference by OpenAI, Anthropic, and SpaceX.
Worse news for Intel: as part of their partnership, Microsoft and Nvidia aim to use the RTX Spark to "reinvent the PC," as Nvidia CEO Jensen Huang put it, replacing the incumbent Intel-standard x86 processor with something entirely new -- and forcing customers to choose.
What it means for Intel
Nvidia has just launched a two-pronged attack on both of Intel's most important businesses: traditional CPUs for PCs, and new inference-tailored CPUs for AI data centers. No wonder Intel investors are nervous.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends HP, Intel, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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