Nvidia Can Pay 50% More For Intel

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2024-09-25 22:00:02

The Intel logo is being displayed on a smartphone screen in Athens, Greece, on July 22, 2024. (Photo ... [+] Illustration by Nikolas Kokovlis/NurPhoto via Getty Images)

Mobile chipset specialist Qualcomm approached Intel regarding a potential takeover, per a report in The Wall Street Journal. However, Nvidia would be a far better suitor, with the ability to pay up to 50% more for Intel. Why? Nvidia is worth close to $3 trillion. Intel is valued at about $95 billion, and Qualcomm is worth about $190 billion. Nvidia has close to $35 billion in cash, and Qualcomm has less than $10 billion. Intel’s 50+ years of chip design, manufacturing excellence, and CPU market share are worth way more in Nvidia’s hands. Simply put, Nvidia can easily sprinkle and infuse Intel’s products with its magic and momentum to take share back from AMD in the servers and PC markets. Think of it this way - Nvidia’s AI-powered chips for your PC. This becomes compelling when you consider Nvidia is already a supplier of GPUs for PCs and accelerated computing chips for servers. Although there would be significant regulatory hurdles for Nvidia to make this happen and there have been no real announced deal talks with Nvidia so far, we believe bankers might see a big opportunity. We describe our thinking and numbers below.

The stock has fallen over 55% this year and by nearly 70% from its 2021 highs, amid market share losses and multiple manufacturing-related missteps. Despite this, Intel is showing signs of a recovery - its foundry business has notched up high-profile customers including Amazon’s AWS while its upcoming PC, data center CPUs, and accelerated computing processors look promising. Intel is getting serious about its cost cuts - aiming to slash costs by as much as $10 billion by next year.