NVIDIA NASDAQ: NVDA The stock price fell following reports that China was investigating antitrust violations. This move could impact NVIDIA’s business; China accounts for about 15% of annual revenue, but how far is China willing to go? NVIDIA chips and the CUDA platform are essential today to harness the power of artificial intelligence; China’s investigation is more of a warning than a credible threat.
NVIDIA has competitors and Advanced Micro Devices NASDAQ: AMD is one of them, but it is still in catch-up mode, leaving China with few options other than to slap NVIDIA in the face and let it do its own thing. As for who the warning was addressed to, it is questionable whether it was addressed to NVIDIA, the US government, or both. The investigation could be China’s response to US sanctions on semiconductors, raising tensions in the global semiconductor war.
NVIDIA is under investigation for monopolistic activities in China and the US
The potential breach relates to the acquisition of Mellanox in 2019/2020. Mellanox was an enterprise-focused networking company. Its fabless business included a variety of adapters, switches, cables and other semiconductor products for high-performance computing, data center, cloud computing and storage applications.
NVIDIA announced plans to acquire the company in 2019 and closed the deal in 2020 for $6.9 billion. Today, Mellanox is part of NVIDIA’s networking business, which includes high-speed Ethernet and Infiniband solutions. China is upset that NVIDIA did not disclose information about Mellanox products within 90 days to prevent a monopoly.
Meanwhile, the US Department of Justice is investigating whether NVIDIA made it harder for consumers to get competing products. The answer to the fact that NVIDIA is actively working against its competitors remains to be found. However, the company will likely focus on the fact that its products provide the foundation for the technological revolution that CUDA is ushering in.
Is it difficult for NVIDIA’s semiconductor competitors to compete? Yes, it is. They are years behind the development of similar technologies and support infrastructure, and the demand for these products is enormous. The question is whether NVIDIA has the ability to lose market share, and the answer is yes.
Most AI developers don’t care whether the data center is labeled NVIDIA, Advanced Micro Devices, or another brand, as long as it can handle the workload, train models, and run applications.
What do analysts think of China’s investigation? Not much, at least not enough for any changes to appear soon after release. This news certainly raises some questions, but the takeaway is that revenue and earnings growth forecasts are unchanged. In fact, consensus published by MarketBeat projects another 50% increase in 2025, enough to put revenue growth at about 6,500% from 2020, when the AI boom was just getting started. Based on trends, the forecast is likely to be low and NVIDIA will outperform the market.
Institutional and stock cash flows at NVIDIA
NVIDIA stock forecast today
$164.15
Growth potential 15.24%Moderate purchase
Based on ratings from 43 analysts
| High forecast | US$200.00 |
|---|---|
| Average forecast | $164.15 |
| Low forecast | $85.00 |
NVIDIA stock forecast details
Institutional activity shows that market support for NVIDIA remains strong. The balance of activity has been bullish all year and is unlikely to change until there is a clear sign that the business has reached the top. Until then, institutional activity is a tailwind for the market that will likely support it during downturns like the one caused by news of the Mellanox investigation.
The NVIDIA stock market is down more than 2.0% but is still well above critical support targets and showing support throughout the day. The likely scenario is that NVIDIA stock will continue to move sideways within its range, with the possibility of setting a new high by the end of the year or early 2025. The analysts’ consensus price target suggests 15% upside from the 150-day EMA. at the beginning of December; The revision trend leads to the target cap range or a further 15% upside potential.
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