Nvidia is investing $5 billion in Intel. The news comes after the US government took a roughly 10 percent equity stake in the struggling chipmaker.

The companies will focus on seamlessly connecting NVIDIA and Intel architectures using NVIDIA NVLink — integrating the strengths of NVIDIA’s AI and accelerated computing with Intel’s leading CPU technologies and x86 ecosystem to deliver cutting-edge solutions for customers.

Intel shares surged more than 20% after CEO Lip-Bu Tan announced a landmark partnership with Nvidia's Jensen Huang to co-develop AI chips, a deal that includes a $5 billion Nvidia investment and positions both companies at the center of the next era of computing.

Nvidia shocked investors by taking a 5% stake in Intel—and the U.S. government is a big winner.

What Happened in Markets Today Nvidia bets $5 billion on Intel. Intel's shares jumped 23% by the closing bell, even after both companies made clear that the deal [doesn't involve volume commitments](