Nvidia shares fell Monday morning after China said it was investigating the high-flying U.S. chip company for alleged violations of Chinese anti-monopoly laws.
In a brief press release with little detail, Chinese regulators appear to be focusing on Nvidia’s acquisition of networking and data communications company Mellanox for $6.9 billion in 2019.
Nvidia shares fell 2.5% Monday morning, falling below $140 each.
RELATED STORY | Nvidia overtakes Microsoft to become the most valuable US company
Seen as a bellwether for demand for artificial intelligence, Nvidia has led the AI sector to become one of the biggest companies in the stock market as tech giants spend heavily on chips and centers of company data, necessary for the training and operation of their AI systems.
Nvidia shares have nearly tripled this year as the California company’s revenue and profits have soared on demand for AI. According to data firm FactSet, about 16% of Nvidia’s revenue comes from China, second only to its revenue generated in the United States.
In its latest earnings release, Nvidia reported revenue of $35.08 billion, up 94% from $18.12 billion a year ago. Nvidia earned $19.31 billion in the quarter, more than double the $9.24 billion it reported in the third quarter of last year. The results release did not break down revenue from China.
The company’s market value recently soared to $3.5 trillion, surpassing Microsoft and briefly surpassing Apple as the world’s most valuable company.
Nvidia’s invention of graphics processing unit, or GPU, chips in 1999 helped drive the growth of the PC gaming market and redefine computer graphics.
RELATED STORY | Nvidia reports quarterly revenue, says new AI chips are on the way
Last month, the Santa Clara, Calif.-based tech giant replaced Intel in the Dow Jones Industrial Average, ending the semiconductor pioneer’s 25-year presence on the index.
Unlike Intel, Nvidia designs but does not manufacture its own chips, relying heavily on Taiwan Semiconductor Manufacturing Co., an Intel rival.
The Chinese antitrust investigation follows a report this summer by technology news site The Information that the U.S. Department of Justice was investigating complaints from competitors that Nvidia was abusing its dominant market position in the sector. fleas.
Reported allegations include Nvidia threatening to punish those who buy products from both it and its competitors.