Nvidia climbs to record high as CEO says he’s confident regulators will approve Arm acquisition

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Jensen Huang, CEO of Nvidia

  • Nvidia stock climbed as much as 4% on Wednesday to a record high of $676 per share.
  • The jump came after CEO Jensen Huang said he is confident UK regulators will approve the Arm acquisition by next year.
  • Nvidia’s takeover of the chip designer Arm is under review on “national security grounds” by UK regulators.
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Nvidia stock climbed to a record high of $676 per share on Wednesday after comments from CEO Jensen Huang about the acquisition of the chip designer Arm.

In a video call at the Computex conference in Taipei on Wednesday, Huang said he is confident that UK regulators will approve the Arm acquisition by next year.

“I expect this one to take 18 months so that’s later this year, early next year. I am confident about the transaction,” Huang said. “Our companies are complementary so we’ll bring, by nature, innovations that come as a result of companies that come together and offer complimentary things.”

Huang’s statements come after UK regulators announced in an April Public Interest Intervention Notice (PIIN) that they would be reviewing Nvidia’s takeover of Arm on “national security grounds.”

Digital minister Oliver Dowden released a statement announcing the review of Nvidia’s takeover:

“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds. As a next step and to help me gather the relevant information, the U.K.’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.”

An Nvidia spokesperson said of the move by regulators: “We do not believe that this transaction poses any material national security issues.”

“The regulators are looking for: Is this good for competition? Is this pro-competitive and brings innovation to the market? Does it give customers more choice, does it give customers more offerings and more choice? You could see that on the first principle that our companies are completely complementary,” Nvidia’s CEO Jensen Huang said on Wednesday at the Computex conference

Arm was acquired by the Japanese conglomerate SoftBank in 2016 for $31 billion.

Nvidia has said it will pay roughly $40 billion for the company in the proposed acquisition and has committed to paying SoftBank $2 billion whether the deal goes through or not.

Nvidia stock is up roughly 88% in the past year and 26% in 2021 amid record demand for the company’s GPU products from cryptocurrency miners and gamers.

Nvidia recently landed analyst support after a stellar earnings report as well. Piper Sandler, Wedbush, and a number of other Wall Street firms reiterated their “buy” ratings and increased their price targets.

Specifically, Piper Sandler maintained its “buy” rating and raised its price target $690 while Wedbush reiterated its “outperform” rating and raised its price target to $700. Evercore also maintained its “buy” rating and raised its price target to $750.

Nvidia posted a record-breaking quarter on May 26, with sales jumping 84% year-over-year to $5.66 billion.

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Intel and AMD drop after Nvidia unveils plans to sell new CPU processors

Nvidia CEO Jensen Huang
  • Nvidia on Monday unveiled plans to create and sell its own CPU processors, making it a direct competitor with Intel and AMD.
  • Nvidia has historically focused on manufacturing GPU processors, also known as video cards.
  • Shares of Nvidia jumped as much as 4% after the news, while Intel and AMD both fell about 4%.
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Nvidia announced plans to manufacture its own CPU processor, transforming the company into a direct competitor of both Intel and AMD.

The news sent shares of Nvidia surging by as much as 4% on Tuesday, while both Intel and AMD fell by about 4%. Nvidia has historically manufactured premium GPU processors, also known as video cards, with its target customer being PC gamers.

But now, Nvidia is expanding its reach with an Arm-based data center CPU named Grace that delivers a big performance leap for systems that are training AI models, according to the announcement. Nvidia acquired Arm Holdings last year for $40 billion, though the deal has not yet closed.

“The result of more than 10,000 engineering years of work, the NVIDIA Grace CPU is designed to address the computing requirements for the world’s most advanced applications, including natural language processing, recommender systems and AI supercomputing,” Nvidia said.

Intel is the world’s largest maker of data center CPUs, but increased competition has spurred the company to make big multi-billion dollar investments into its manufacturing capabilities.

Grace is expected to be launched in 2023 and will be used in the build of new supercomputers from Swiss Supercomputing Center and the US Department of Energy’s Las Alamos National Laboratory.

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Nvidia slips as concerns over global chip shortage weigh on 4th-quarter earnings beat

NVIDIA computer graphic cards
  • Shares of Nvidia fell on Thursday as investor concerns about a global chip shortage weighed on an otherwise positive earnings report.
  • The stock fell 3% in premarket trades on Thursday.
  • The semiconductor industry has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic.
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Shares of chip maker Nvidia fell 3% in premarket trading on on Thursday as investors’ concerns over the global chip shortage weighed on fiscal fourth-quarter earnings that beat expectations.

Nvidia CEO Jensen Huang during the Wednesday earnings call said he expects the shortage to continue this 2021. But Huang assured investors that the shortage would not affect some segments. 

The semiconductor industry in the past year has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic. Nvidia, which outsources from Asia, Taiwan Semiconductor Manufacturing and Samsung Electronics, in particular, is stuck in the middle. Both Asian companies are having difficulty keeping pace with demand, and the bottleneck has trickled down to Nvidia. 

Nvidia sells semiconductor parts for gaming, artificial intelligence, data centers, and automobiles, among other sectors.

The company reported that revenue jumped 61% to $5 billion for the quarter ending January 31 and adjusted earnings of $3.10 per share, both considerably higher than Wall Street’s $4.82 billion and $2.81 per share estimates.

For the current fiscal first quarter, the chip maker set a forecast of $5.3 billion in revenue versus analysts’ expectations of $4.49 billion. 

For the coming year, the Santa Clara, California-based company remains bullish. Nvidia announced that it is working on graphic cards for mining cryptocurrencies like ethereum, even if the CEO said it will not be a huge part of its business.

Last year, Nvidia announced plans to buy Arm, Softbank’s chip division, for $40 billion. Arm is not a chip maker, but licenses chip designs, widely used in mobile phones, to customers such as Apple, Samsung, and Intel.

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