Nvidia (NVDA) has found itself caught in the escalating crossfire between China and the U.S. According to an exclusive Bloomberg report, citing China Central Television, the Chinese regulator has launched an antitrust investigation into the chip giant. Following the news, shares of NVDA declined in pre-market trading.
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Why Is the Chinese Regulator Probing NVDA?
The State Administration for Market Regulation is investigating Nvidia’s recent conduct, including its 2020 acquisition of Mellanox Technologies for $7 billion. This deal was approved by China around four years ago under specific conditions. One of these conditions required Nvidia not to discriminate against Chinese firms and mandated that Mellanox share information about new products with competitors within 90 days of making them available to the chip giant.
In response, NVDA agreed that Chinese chipmakers would be given a chance to ensure their products are compatible with Mellanox’s technology.
Feud Between the U.S. and China is Rising
Nvidia’s dominance in artificial intelligence (AI) chips has placed it at the center of the tech rivalry between the U.S. and China. The U.S. government has barred Nvidia from selling its most advanced semiconductors to Chinese companies, a move aimed at curbing China’s advancements in AI. In response, Nvidia has attempted to design AI chips compliant with U.S. restrictions, allowing some functionality for its Chinese customers.
This is not the first time Nvidia has faced antitrust scrutiny. Earlier this year, the U.S. Department of Justice initiated an investigation into whether Nvidia’s business practices limited competition by discouraging customers from switching suppliers and penalizing buyers who didn’t exclusively use its chips.
Is NVDA a Good Stock to Buy?
Analysts remain bullish about NVDA stock, with a Strong Buy consensus rating based on 37 Buys and three Holds. Over the past year, NVDA has skyrocketed by more than 200%, and the average NVDA price target of $176.14 implies an upside potential of 23.6% from current levels.
