Nvidia’s Proposed Acquisition Of Arm Under Investigation – Report

Nvidia’s proposed acquisition of Arm Ltd could be in trouble, according to a Reuters report from Feb. 13, citing Bloomberg. The Federal Trade Commission (FTC) has opened a probe into the acquisition and has sent demands for information to third parties, Reuters said, citing Bloomberg.

Nvidia’s (NVDA) proposed acquisition of Arm has also been opposed by tech giants like Alphabet (GOOGL), Qualcomm (QCOM) and Microsoft (MSFT).

In September last year, Nvidia had proposed a $40 billion acquisition of Arm, from the SoftBank Group. The acquisition aimed to build an Arm and Nvidia powered AI (artificial intelligence) supercomputer and expand Arm’s IP (intellectual property) licensing portfolio with Nvidia technology. Arm provides IP semiconductors, and has shipped 180+ billion chips to-date. (See Nvidia stock analysis on TipRanks)

Currently, a chip shortage has affected several companies including Qualcomm. During the announcement of its 1Q FY21 results, the company said that financial performance could have been stronger if it had not been “supply constrained.”

Furthermore, Qualcomm executives told Reuters that chip supply constraints will remain tight through the first half of 2021 without detailing the supply issue. “If we could make more, we could sell it,” Qualcomm CEO Steve Mollenkopf told Reuters in an interview.

On Feb. 11, Wells Fargo analyst Aaron Rakers reiterated a Buy rating and a price target of $625 on the stock. Rakers said about the sales of the company’s GeForce graphics card, “With an expanding catalog of next-gen games supporting ray tracing, and thus the need for performance upgrades, we continue to expect that NVIDIA’s gaming GPU product cycle momentum will remain strong through 1H2021.”

Meanwhile, Nvidia scores a Strong Buy consensus rating from the analyst community. That’s based on 14 analysts recommending a Buy and 4 analysts suggesting a Hold. The average analyst price target of $605.71 implies 1.2% upside potential to current levels.

Nvidia scores an 8 out of 10 on the TipRanks Smart Score system, indicating the stock has a high likelihood of outperforming the market.

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