Chipmaker Nvidia (NASDAQ:NVDA) could face antitrust charges from French regulators, Reuters reported. This comes after the French competition agency raided the offices of a top company in the GPU sector. While the French authority did not officially disclose the company’s identity, sources confirmed that Nvidia was the focus of the investigation.
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The Regulatory Context
The raid was part of a broader inquiry into the cloud computing sector. The French authority is concerned that large companies could use their resources to harm small players.
Nvidia’s AI chips are in high demand, drawing regulators’ attention. The French antitrust authority is concerned about the sector’s reliance on Nvidia’s chips. The regulatory body is also worried about Nvidia’s investments in AI-focused cloud firms such as CoreWeave.
It’s worth noting that Nvidia is diversifying its offerings and solidifying its leadership in AI technology through investments and acquisitions.
Potential Consequences for NVDA
If found guilty of violating French antitrust laws, the authorities could fine NVDA up to 10% of its global annual revenue. However, there is scope to negotiate with the antitrust authority and avoid such penalties.
It remains to be seen how this situation will evolve. Meanwhile, let’s look at NVDA’s risk profile.
Nvidia’s Risk Analysis
Nvidia has managed its legal and regulatory risks well. In a regulatory filing, the company said that complying with laws and regulations has not significantly affected its capex or competitive position.
As Nvidia successfully navigates through the evolving landscape of laws and regulations, TipRanks’ Risk Analysis tool shows that its legal and regulatory risk exposure is lower than the industry average. Legal and regulatory risks account for 16.7% of its total risks, lower than the industry average of 20.3%.
With this background, let’s look at the Street’s recommendation for NVDA.
Is Nvidia a Buy, Sell, or Hold?
Wall Street analysts are bullish about Nvidia stock. The stock has 38 Buys and three Hold recommendations for a Strong Buy consensus rating. The analysts’ price target on NVDA stock is $135.81, implying 9.26% upside potential from current levels. NVDA stock is up about 151% year-to-date, outperforming the S&P 500’s (SPX) over 14% gain.
