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and welcome to the program. Why do you believe this is such a huge game changer? Pop the champagne. I mean for Intel now you have Nvidia godfather of AI doubling down and this follows obviously US government investment. I mean what this essentially does it brings Intel into the AI game. You think that from a stock perspective that that changes the multiple and you know clearly this is also going to be viewed very positively in DC.
I think that's something that could definitely help Jensen and others when it comes to China. Dan I do wonder though about Mandep's point this idea that this isn't Nvidia going allin and developing their chips for the big semiconductors the the big uh hyperscalers at the in uh at the Intel foundry. This is simply a $5 billion side project about PCs.
How much is this essentially just an olive branch to the president and not an actual move of Nvidia to try to fortify Intel's plans to become the foundry? And welcome to the program. Why do you think this is such a significant shift in the game? Crack open the champagne. The godfather of AI, Nvidia, is now investing twice as much as Intel, which is clearly a US government investment.
In other words, this basically introduces Intel into the AI space. You believe that this alters the multiple from a stock standpoint and you are aware that this will also be seen favorably in Washington DC. In my opinion, Jensen and others may benefit greatly from it in regards to China. Dan, however, Mandep's remark that Nvidia isn't investing heavily in creating chips for the large semiconductors and hyperscalers at the Intel foundry makes me worry.
This is just a PC related side project worth roughly $5 billion. To what extent is this only an act of goodwill toward the president rather than a real attempt by Nvidia to strengthen Intel's intentions to become the foundry? Yes, as usual, Mandip makes excellent points, but notice that this also doubles down on investment in the United States.
That's what it is after all. Now, that's obviously an olive branch to the Trump administration and others, but they're also giving themselves another possible growth lever in terms of the PC upgrade cycle. X86, I mean, right now, Nvidia is in control. Everyone else is paying their rent and they are aware of their enormous advantage.
Think about it though for Intel. You mentioned a month ago that you were concerned that the CEO would be leaving and now you have government funding, Intel, and now Nvidia. That is after all a goldilock situation for Intel. This is happening at a time when China is making a concerted effort to produce its own technology domestically and to develop national champions capable of competing with Nvidia and other American tech behemoths.
Just wondering if companies like Nvidia can keep pushing into China and selling more sophisticated processors there while still, you know, tinkering with the notion of American independence from China. Look, it's a tightroppe act, but the truth is that Nvidia and Jensen, the godfather of AI, are the only chips in the world driving the AI revolution.
And for that reason, they might tell Beijing and Chinese big IT companies not to purchase Nvidia chips in China. It would be equivalent to instructing a child not to eat the sweets that is on the table. That's the truth, as Huawei and other companies are years ahead of the curve. However, the Trump administration also acknowledges the need to improve AI chip manufacturing and infrastructure.
And if you look at Intel, you can see that they have clearly moved past being a major behind. Even with all the red tape and black eye incidents, Intel has some beneficial aspects at last. What if you had a warning from your desk before your retirement was erased? Your retirement account could be wiped out overnight if you don't purchase this package.
There is only 100 pieces available. So order yours right away using the link below. Does this partnership increase your confidence in Nvidia Gan? Does it make a difference? I believe it does. The key to Nvidia success, in my opinion, still lies in the basics. These are the top eight businesses. They make up somewhat more than 60% of total revenue.
Simply go ahead to mid or late October when we're receiving the September guidance. If you want to see where things are headed, three things need to be observed. It is the capital expenditure guidelines provided by Google, Amazon, and Microsoft. They predicted last quarter that their 2026 capital expenditures would increase by an average of 7%.
Meta predicted a 47% increase. Considering that the majority of Nvidia's business is still with these hyperscalers, this announcement today doesn't really mean anything to me. and investors only need to look at that guidance to get a sense of what's going to happen with Nvidia. If they increase it to 20%, Nvidia will surpass the competition.
This will continue for a longer period of time than investors are now accounting for. And if that's the case, Gan, you've undoubtedly heard some good news about Nvidia. The stock itself has been somewhat flat and unimpressive since it was repriced after earnings. Investors seem to be vying for the next untapped name that might have a bit more power to generate additional revenue there.
Is it a temporary situation or does it seem like Nvidia is already so big that it's difficult to really, you know, attract investors? I believe that the excitement will return and I know what the second derivative means for the multiple if growth slows. However, in the end, the street anticipates Nvidia to increase by say 30% in the upcoming year.
I believe they can get closer to 40% but perhaps the whisper is a little higher. Furthermore, it is evident that there are several opportunities to generate profit along the AI supply chain. However, I continue to believe that Nvidia will be a formidable opponent. We are discussing Nvidia's approximately $5 billion investment in Intel.
As of this video, almost 45 minutes after the market started, Intel's stock is up 25% and has remained largely stable. Nvidia stock is up almost 2.5%. In contrast, the NASDAQ is up almost 1%. Thus, it is evident that the market views this relationship favorably. I'll begin by stating my conclusion, which is that I believe the Intel stock has overreacted.
They shouldn't have a 25% increase. In my opinion, they ought to be up around 5 or 10% on this. In my opinion, however, that is the punchline and the pressure point. After I go over and discuss why Nvidia wants to do this and what it means for Intel, I'll go into further detail. Secondly, how does this impact Nvidia's company as a whole?
Third, how much of an influence does it have financially? First of all, why would Nvidia spend almost $5 billion to acquire a 4% share in Intel? And the consumer has the final say in the matter. Additionally, Nvidia has not been considering the consumer market for accelerators, which are essentially GPUs, another name for GPUs.
Therefore, it goes without saying that hyperscalers are at the heart of their company that comes from essentially eight businesses and accounts for almost 2/3 of their overall revenue. However, the customer hasn't been involved. Last year, Intel's business, which is essentially the PC business, was worth roughly $30 billion.
It fluctuates slightly from year to year, but it accounts for about $30 billion of Intel's total revenue of about $53 billion. To put things in perspective, the customer is the largest and most significant component of Intel's operations. Naturally, they have been unsuccessful in their frantic attempts to get more traction in Nvidia's market.
But Intel's mainstay remains the customer. Therefore, Nvidia benefits from its investment in Intel since it gains access to the consumer market. They must gain something from it. Perhaps it's as simple as improving the quality of the items for customers, which will benefit them a little bit and increase their equity.
For example, if they receive a 10% advantage from that, but it might work to Nvidia's advantage. Additionally, it's a positive image for Nvidia to support the White House in their ownership and demonstrate that major American tech businesses want other American tech companies to be successful. Beyond the stock rising as much as it has today, Intel benefits from this since it brings them closer to becoming a business that has been extremely successful.
as seen by its more than $4 trillion market capitalization. The market value of Intel is approximately $150 billion. In terms of success, we are discussing a difference of orders of magnitude. And I believe Intel wants to try to help them navigate their company by gaining access to some of the intelligence, some of the intelligence at Nvidia.
For each of them, that was sort of what was in it. What what this means for Nvidia's core business is the second topic. and it doesn't signify anything for it in my opinion. In reality, if Nvidia believed that Intel lacked the skills to compete in their core business, the high-end chip industry, they would never have made an investment if that roughly $5 billion had been a lifeline to save.
Intel, it's safe to assume that this isn't Microsoft slapping Apple in the late 1980s or early 1990s. In contrast, Nvidia does not perceive this risk as having anything to do with igniting Intel's more corporate operations. What does the last element entail in terms of finances? The most obvious method for Nvidia to profit from the approximately $5 billion investment is if Intel's stock rises, the stock has risen 26%.
That in itself is a good return on investment. When you consider the numbers that Nvidia is attempting to pass through, it is not that big. I then discussed that consumer market which is worth roughly $30 billion. Additionally, Nvidia would receive about $3 billion annually if they could somehow establish a partnership in which they received 10% of the company's value.
Just speculating what if there was more than the simple investment, $3 billion annually or slightly more than 1% of their 2026 revenue. Don't take your retirement for granted. Get my precise Patreon by trim levels for Nvidia.
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