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.

Intel (NASDAQ:INTC) stock surged on Thursday after unveiling a sweeping partnership with Nvidia (NASDAQ:NVDA) to co-develop custom chips and next-generation systems, a breakthrough that thrusts the long-struggling chipmaker into the center of the artificial intelligence boom and signals a new front in the global race for computing dominance.

Last month, the federal government bought 433 million shares of Intel at $20.47 a piece. With Intel stock up almost 26% at $31.27, the government is up more than 50%, or $4.7 billion, on its “trade.” Nvidia shares were up 2.9% at $175.16, while the S&P 500 and Dow Jones Industrial Average were up 0.7% and 0.5%, respectively.

Intel shares soared on Thursday after the company announced a partnership with Nvidia, which will buy $5 billion of Intel stock.

Nvidia is investing $5 billion in Intel in a “multigeneration” partnership. The pact could aid Intel’s turnaround, but the scope for Intel’s foundry remains uncertain as Nvidia said that TSMC will stay its primary fabricator.

Intel employees are making it clear that Intel's existing processor roadmap remains in place, despite the bombshell deal with Nvidia that dropped today. But what that deal will add is another story.

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](