Nvidia is putting $3.5 billion into MediaTek convertible bonds, and two big U.S. investment banks say this is good news for the Taiwanese chip designer.

• Nvidia took up almost 90% of MediaTek's convertible bond offering, worth about $3.5 billion.
• Both banks kept "buy" ratings, with price targets far above where the stock trades now.
• The money is expected to go toward locking up chip supply — memory, advanced packaging materials, and factory capacity booked ahead of time.
• Closer ties with Nvidia improve MediaTek's odds of landing a second and third big cloud customer for its custom AI chips.
• Google's parent Alphabet also joined the bond deal, strengthening the existing partnership on Google's TPU chips.

Outlook: MediaTek's custom AI chip revenue estimates for 2028 look likely to be revised upward, and the shift toward big AI chips should reduce its dependence on the up-and-down smartphone market.