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

nvidia impressive ceos 2x1
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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The most transformative CEOs of 2021

Most impressive CEOs collage including Shantanu Narayen of Adobe, Albert Bourla of Pfizer, Mary Barra of GM, Jensen Huang of NVIDIA
From left: Shantanu Narayen, the CEO of Adobe; Albert Bourla, the CEO of Pfizer; Mary Barra, the CEO of GM; Jensen Huang, the CEO of Nvidia.

Leadership in 2021 is marked by transformation.

Of business models, of workforces, of organizations themselves. Insider’s inaugural list of the Most Transformative CEOs celebrates the four executives who are best meeting the needs of their many stakeholders. They do not merely protect the bottom line. They also devise strategies to respond to changing markets, tackle the climate crisis, and serve as stewards for the well-being of their employees – and the world.

Insider is proud to announce this first class:

Mary Barra, the CEO of General Motors

Albert Bourla, the CEO of Pfizer

Jensen Huang, the CEO of Nvidia

Shantanu Narayen, the CEO of Adobe

Insider arrived at this list by way of both quantitative and qualitative analysis. We considered the 100 CEOs of the largest publicly traded US companies by market capitalization on the S&P 500 who have been in their positions since at least January 2019. We ruled out executives who are on their way to stepping down, including Ken Frazier, the CEO of Merck.

We evaluated companies and CEOs across measures of recent financial performance, ratings on employee review sites Comparably and Glassdoor, typical employee compensation and the CEO-to-median-pay ratio, and the 2021 Just Capital ranking of companies’ commitment to social responsibility.

To choose the CEOs we wanted to feature, we considered the above metrics, as well as a qualitative sense of leaders guiding their firms through a historically difficult year. We believe these CEOs exemplify the traits and achievements needed to survive and thrive in that challenging environment.

Keep scrolling to learn more about what makes each CEO on Insider’s list deserving of the title of Most Transformative CEO.

MARY BARRA, the CEO of General Motors

Mary Barra, CEO of General Motors Company
Mary Barra, the CEO of General Motors.

Without doubt, the most successful CEO in GM’s recent four or five decades. Bob Lutz, a former GM vice chairman

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ALBERT BOURLA, the CEO of Pfizer

Albert Bourla, CEO of Pfizer
Albert Bourla, the CEO of Pfizer.

What they’ve done on the vaccine is remarkable. How quickly they’ve developed it, and now getting it out, especially in the US, is incredible. Vamil Divan, a senior biopharmaceuticals research analyst at Mizuho

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JENSEN HUANG, the CEO of Nvidia

Jensen Huang, CEO of Nvidia
Jensen Huang, the CEO of Nvidia.

One of these extremely rare individuals who has taken a zero-revenue company to $20 billion Rene Haas, Nvidia’s executive vice president

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SHANTANU NARAYEN, the CEO of Adobe

Shantanu Narayen, CEO of Adobe
Shantanu Narayen, the CEO of Adobe.

His ability to connect dots across different parts of the business, across different market trends, and then very succinctly distill the key decisions that need to be made is something I marvel at. Amit Ahuja, Adobe’s VP of Experience Cloud

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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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Tesla asked to recall 158,000 Model S and Model X vehicles over a safety defect involving failing touchscreens

Tesla Model S
  • Tesla was asked by the National Highway Traffic Safety Administration to recall around 158,000 vehicles over faulty touchscreens, the agency said in a letter to the company Wednesday.
  • The NHTSA said the media control units on certain Tesla vehicles failed after their memory ran out, causing issues with the backup camera, defogging and defrosting settings, Autopilot system, and turn signals.
  • The issue impacted certain 2012-2018 Model S vehicles and 2016-2018 Model X vehicles, which used the NVIDIA flash memory devices that failed — after just five to six years on average.
  • Vice News first reported on the issue in October 2019, prompting the NHTSA to open an investigation in June 2020.
  • Visit Business Insider’s homepage for more stories.

The National Highway Transportation Safety Administration sent a letter to Tesla on Wednesday asking the company to recall around 158,000 vehicles over faulty touchscreen hardware.

The agency said it was “investigating a potential safety-related defect concerning incidents of media control unit (“MCU”) failures” that had resulted in problems with the backup camera, defogging and defrosting settings, Autopilot, and turn signals.

The issue, which stemmed from the MCUs failing after exceeding their storage capacity, impacted certain 2012-2018 Model S and 2016-2018 Tesla Model X vehicles.

The touchscreens on those models are powered by an NVIDIA processor which stores data in an attached “flash memory device.” But those devices have a finite amount of storage capacity, and according to the NHTSA’s investigation, once they filled up – which happened after just 5 to 6 years, on average – they shut down, causing the MCUs to fail and creating other safety issues.

The MCU failures resulted in the rearview/backup camera screen going “black,” an inability to control defogging and defrosting settings, and the loss of some Autopilot alerts and turn signal functionality, which the agency said could “increase the risk of crash.”

The NHTSA said its Office of Defects Investigation had “tentatively concluded that the failure of the media control unit (MCU) constitutes a defect related to motor vehicle safety.” While the letter doesn’t formally require Tesla to order a recall, the automaker must submit additional justification if it decides not to, and the NHTSA can still take further action if it isn’t satisfied with Tesla’s response.

Vice News originally reported on the issue in October 2019, citing a Tesla repair expert who said: “When this burns out, you wake up to a black screen [in the car’s center console.] There’s nothing there. No climate control. You can generally drive the car, but it won’t charge.”

The NHTSA said it opened its own investigation on June 22, 2020.

Read more: How Tesla bounced back from worst mistake Elon Musk ever made and became the world’s most valuable car company

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Nvidia pares Thursday gains after spiking on Citi analyst’s strong outlook

Semiconductor manufacturing.
Nvidia semiconductor manufacturing.

  • Nvidia stock trimmed gains Friday after a strong showing on the back of Citigroup’s positive note on Thursday.
  • Analyst Atif Malik’s EPS estimates are 2%-5% ahead of street estimates, which implies Nvidia could post a $2.94 EPS figure when the company reports earnings on February 11.
  • Nvidia now boasts 30 Buy ratings, 5 hold ratings, and just 4 Sell ratings from analysts.
  • Visit Business Insider’s homepage for more stories.

Shares of Nvidia trimmed gains Friday after surging some 4.3% Thursday on a strong outlook from Citigroup. The stock was down around 1% early Friday afternoon. 

Citigroup analyst Atif Malik said in a note that Nvidia’s stock has lagged its chip manufacturing peers and could offer upside potential ahead of next week’s virtual CES conference.

Nvidia was added to Citi’s “Catalyst Watch List” and the bank maintained its $600 price target.

Malik noted Nvidia has fallen over 15% from its early November high of over $580 per share, while the iShares semiconductor index SOXX has gained over 24% during the same period.

Read more: Wall Street experts are calling Georgia’s runoff results ‘the first surprise of 2021.’ Here’s how 4 of them recommend positioning your portfolio for what could happen next.

Citi expects hyperscale-led data center demand recovery in the first half of 2021 and sustained PC gaming demand to drive an EPS boost.

Their analysts’ EPS estimates for Nvidia remain 2%-5% above street projections.

That’s worth noting, as Street analysts already expect Nvidia to grow its earnings by 48% in the January quarter to $2.80 per share. That’s on top of 55% year-over-year sales growth which will see Nvidia closing on the $5 billion revenue mark for the quarter.

Read more: Investing legend Terry Smith’s $30 billion equity fund returned 449% to investors over a decade – Here’s his 4-part strategy for success and 10 pieces of investing wisdom to take into 2021

This news comes just weeks after Wells Fargo boosted their price target for the chip manufacturer to $625 per share from $600 per share.

As of Friday, Nvidia boasted 30 Buy ratings, 5 Hold ratings, and just 4 Sell ratings from analysts, per MarketBeat.

Shares of Nvidia are down over 1% Friday afternoon, trading at $529.07 per share as of 12:55pm E.T.

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