Shares of Nvidia experienced a decline on Monday following the announcement that China is conducting an investigation into the U.S. microchip company for potential violations of Chinese anti-monopoly laws. The investigation appears to be centered around Nvidia's acquisition of Mellanox in 2019, with Chinese regulators releasing limited details on the matter.
As a result of this news, Nvidia's shares dropped by 2.5% in morning trading on Monday, falling below $140 per share. Nvidia is recognized as a key player in the artificial intelligence sector, with its chips and data centers being heavily utilized by tech giants for AI-related operations.
Despite the recent setback, Nvidia has seen significant growth this year, with its shares nearly tripling in value. The company's revenue and profit have surged due to the high demand for AI technology, with approximately 16% of its revenue originating from China.
In its latest earnings report, Nvidia revealed a revenue of $35.08 billion, marking a 94% increase from the previous year. The company's earnings for the quarter totaled $19.31 billion, more than double the figure reported in the same period last year.
Nvidia's market value recently reached $3.5 trillion, surpassing Microsoft and briefly overtaking Apple as the world's most valuable company. The company's invention of graphics processor chips in 1999 played a pivotal role in the growth of the PC gaming market and revolutionized computer graphics.
Furthermore, Nvidia's inclusion in the Dow Jones Industrial Average last month, replacing Intel, signified its growing influence in the tech industry. Unlike Intel, Nvidia focuses on chip design rather than manufacturing, relying heavily on Taiwan Semiconductor Manufacturing Co.
The antitrust investigation initiated by China follows reports of a similar probe by the U.S. Justice Department, which investigated complaints from Nvidia's rivals regarding alleged market dominance abuse. The allegations included claims of Nvidia threatening repercussions against customers who purchased products from both Nvidia and its competitors simultaneously.
