Nvidia shares slip into correction territory after FTC sues to stop trading with Arm

Shares of Nvidia Corp. slipped into a correction on Friday, a day after the chipmaker’s opportunity to close its acquisition of chip designer Arm Ltd. even decreased.


shares fell 6% on Friday, or more than 12% below the all-time high of $346.47 set on Nov. 22.

Late Thursday, the Federal Trade Commission sued to block the $40 billion acquisition of Arm from SoftBank Group Corp.

that has encountered some difficulties since the first time announced back at the end of 2020.

In a note, Bernstein analyst Stacy Rasgon, who has better ratings and a $360 price target on Nvidia, said of the deal “nobody thinks it’s going to close anyway,” suggesting action. of the FTC could support the thinking of other regulators, and that Nvidia “will be fine.”

The FTC statement “indicates that the agency has worked closely with competition authorities in the EU, UK, Japan, and South Korea (i.e. virtually every significant geographic region except China), for see that where the FTC is going, the rest of the world is likely to follow. “

“Owning Arm would be great and allow Nvidia to help create and invest in the broader Arm data center ecosystem, and we’d love to see that happen,” Rasgon said. “But if they can’t cash it out, they save the purchase price in cash and stock (originally ~$40 billion, now closer to ~$75 billion due to stock price increase since announcement) deal), and will certainly continue to push forward on their Arm servers and independent DPU efforts. ”

Citi Research analyst Atif Malik, who has a buy rating and a $350 price target on Nvidia, said that with the FTC action he knows he expects a 5% chance of a close, down from a 30% chance of a close. previous association.

“We see a potential path forward if Nvidia can come up with remedies that, among other options, could include creating a ‘China Wall’ between the R&D and Arm’s business contracts to alleviate regulatory antitrust concerns,” Malik said.

Not only did Nvidia stock fall into correction territory, but it was also joined by Advanced Micro Devices Inc.

Shares were down 6% on last test, or 14% below their all-time high of $164.46 set on Nov. 30.

Both Nvidia and AMD recently posted strong, record earnings amid continued global chip shortages.

Similarly, PHLX . Semiconductor Index

down more than 5% from the recent high of 2,675.37 touched on November 22. Nvidia shares slip into correction territory after FTC sues to stop trading with Arm


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