CNBC's Jim Cramer unpacked Monday's market action and reviewed why artificial intelligence giant Nvidia saw gains after it announced a partnership with Synopsys, an electronic design automation outfit.
"Nvidia's work with Synopsys, while almost invisible to you, the consumer, has much more potential to actually make a lot of money," he said. "Wall Street, you see, loves business to business."
Nvidia said Monday that it had taken a $2 billion stake in Synopsys, expanding the two companies' longstanding partnership. The deal is about "revolutionizing one of the most compute intensive industries in the world: design and engineering," Nvidia CEO Jensen Huang told CNBC's "Squawk on the Street."
Nvidia stock closed up 1.65% while Synopsys added 4.85%. Nvidia shares have been under pressure recently as investors worry about the company's business in China and competition from hyperscaler peers like Google, which is expanding production of its own chips.
Cramer said the partnership with Synopsys is significant because it could make large-scale construction much easier and cheaper, leading to a "replacement cycle of immense proportions."
Nvidia's Synopsys investment also expands the company's reach to lucrative endeavors beyond artificial intelligence chatbots, Cramer indicated. He suggested it's not ideal for Nvidia if the new version of Alphabet's Gemini grows in popularity while OpenAI's ChatGPT falters, as OpenAI is a close Nvidia affiliate. However, he said chatbots are a "business to consumer strategy," and the stock market has found that dynamic to be fickle and hard to game compared to business to business operations.
But he conceded that it's hard to tell if the Synopsys deal will "stem the selling" in Nvidia's stock.
"Still, though, this deal matters," he said. "It wasn't for show, it was for substance."
Nvidia did not immediately respond to request for comment.