Nvidia stock fell on Monday after China announced it was investigating the fast-growing U.S. microchip company for suspected violations of Chinese antitrust laws.
In a short news release with few details, Chinese regulators appeared to focus on Nvidia’s $6.9 billion acquisition of network and data transmission company Mellanox in 2019.
Nvidia stock was down about 3% on Monday. It’s still up 179% so far this year.
Considered a bellwether in the demand for artificial intelligence, Nvidia has led the AI sector to one of the top spots in the stock market. largest companiesThat’s because the tech giant spends millions on its chips and data centers needed to train and operate its AI systems.
Nvidia’s stock price has soared this year, along with the California company’s sales and profits due to demand for AI. About 16% of Nvidia’s revenue comes from China, second only to U.S. revenue, according to data firm FactSet.
A spokesperson for the Santa Clara, California-based company said in an emailed statement that NVIDIA is “willing to answer any questions regulators may have regarding our business.”
among them recent earnings According to the announcement, Nvidia’s revenue was $35.08 billion, up 94% from $18.12 billion in the year-ago period. Nvidia earned $19.31 billion in the quarter, more than double the $9.24 billion it earned in the third quarter last year. Revenue from China is not broken down in the financial results announcement.
The company’s market value recently surged to $3.5 trillion, overtaking Microsoft and briefly surpassing Apple to become the world’s most valuable company.
China’s antitrust investigation follows a report this summer in technology news site The Information that the U.S. Department of Justice was investigating complaints from competitors. Nvidia was abusing its market power In the chip field. Reported allegations include NVIDIA threatening to punish anyone who buys products from both itself and a competitor at the same time.
David Bieri, an international finance expert at Virginia Tech, said the China investigation “isn’t really about what Nvidia is doing in China,” but rather a signal to the incoming Trump administration. Bieri said China is trying to set the tone for future relations.
He said the Chinese government is telling the United States: “All your beloved enterprises that are necessary for your capitalist prosperity are tied to China, so don’t mess with us.”
Nvidia will either have to adjust its strategy in China or factor into its budget the uncertainty that doing business with China brings, Vieri said.
“I don’t think this is something they can shake off,” he said. “I also have great faith in the strategic management of companies like NVIDIA, which pay attention not only to credit risk, market risk, and operational risk, but also political risk.”
The graphics processor chip (GPU), invented by Nvidia in 1999, fueled the growth of the PC gaming market and redefined computer graphics.
Last month, it was on behalf of intel The rise in the Dow Jones Industrial Average ended the pioneering semiconductor company’s 25-year streak of rising shares in the Dow Jones Industrial Average.
Unlike Intel, Nvidia designs its own chips but does not manufacture them, relying heavily on Intel’s rival Taiwan Semiconductor Manufacturing.
___
Associated Press technology writer Sara Parvini in Los Angeles contributed to this report.
