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AMD shares fell 5% in premarket trading on Thursday following the announcement of a major strategic partnership between rivals Intel (INTC) and Nvidia (NVDA). The collaboration, which includes a $5 billion Nvidia investment in Intel, aims to co-develop AI infrastructure and personal computing products that could directly challenge AMD’s market position. Intel’s stock surged nearly 30% on the news, highlighting the significance of this alliance in the competitive semiconductor landscape.

Intel–Nvidia Alliance Targets AI and PC Markets, Pressuring AMD
 

The Intel-Nvidia collaboration centers on integrating Nvidia’s AI expertise with Intel’s CPU technologies using Nvidia’s NVLink technology. Under the agreement, Intel will manufacture custom x86 CPUs for Nvidia’s AI infrastructure platforms while developing x86 system-on-chips that integrate Nvidia RTX GPU chiplets for the consumer PC market. This partnership creates products that directly compete with AMD’s offerings in both data center and consumer segments.

Nvidia’s $5 billion investment in Intel common stock at $23.28 per share further strengthens the alliance between the two companies. The collaboration represents a significant shift in the semiconductor industry’s competitive dynamics, as it unites two of AMD’s primary rivals in both the CPU and GPU markets. Mizuho analyst Jordan Klein characterized the development as “BAD FOR AMD,” noting that Nvidia could have partnered with AMD instead but chose Intel, creating additional competitive pressure.

AMD Shares Weaken as Alliance Raises Threats to Market Share
 

As of Thursday afternoon, AMD shares were trading at $154.79, down 2.75% from the previous close of $159.16. The stock has shown mixed performance this year, with a year-to-date return of 28.16% compared to the S&P 500’s 12.83%, though its one-year return of 4.40% significantly trails the broader market’s 18.12%. AMD maintains a market capitalization of approximately $251 billion with analyst price targets ranging from $125.10 to $230.00, averaging $185.77.

The partnership announcement poses a multi-faceted challenge for AMD, which has been gaining ground against both Intel in CPUs and Nvidia in GPUs, particularly in AI applications. AMD now faces intensified competition as its two main rivals combine their strengths, potentially limiting AMD’s market share growth in the rapidly expanding AI chip market. The collaboration particularly threatens AMD’s data center ambitions and its positioning in the gaming and consumer PC markets where it competes with both companies’ products.

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