China Launches Antitrust Investigation on Nvidia, Stock Drops

Nvidia (NVDA), the market's star for the last year, has taken a hit that few saw coming.

Wall Street saw its stock decline by over 3% on Monday following China's initiating an antitrust investigation into the chip giant. This dip comes alongside tensions between Beijing and Washington over dominance in artificial intelligence, which only continues to heat up. Specifically, the Chinese probe focuses on Nvidia's potential anti-monopoly practices, particularly scrutinizing its 2020 acquisition of Mellanox, a leading supplier of high-performance networking solutions, now part of NVIDIA, specializing in end-to-end Ethernet and InfiniBand intelligent interconnect technologies. China's State Administration previously approved this $7 billion purchase for Market Regulation stipulating that Nvidia would not discriminate against Chinese companies.

Reports from Chinese media suggest that Nvidia's acquisition of the Israeli computer networking firm may have breached Beijing's anti-monopoly laws and rubbed them incorrectly. Nvidia, always trying to play nice and likely trying its best to escalate the US-China tech rivalry, affirmed its commitment to providing top-quality products globally and cooperating with regulators. To us, they sound a bit scared.

Adding to the geopolitical drama, the investigation against Nvidia is coming at the same time as Donald Trump's return to the White House next month, which means, you guessed it, tariffs. Nigel Green, CEO of deVere Group, described China's actions as a strategic geopolitical maneuver, indicating that Nvidia's case might signal more aggressive measures from China in the future, which we already saw with their recent moves knee-capping rare earth minerals from the US market.