Nvidia stock fell early Monday after China announced it was investigating the well-known microchip company for possible violations of China's antitrust laws.
In a short press release with few details, Chinese regulators appeared to focus on Nvidia's $6.9 billion acquisition of network and data transmission company Mellanox in 2019.
Nvidia stock fell 3% on Monday, below $140.
Nvidia, considered a leader in artificial intelligence demand, has pushed the AI sector to the top of the stock market as the tech giant invests heavily in the company's chips and data centers needed to train and operate its AI systems. It has led me to one of the largest companies in the world.
Nvidia's stock has nearly tripled this year as demand for AI has boosted the California company's sales and profits. About 16% of Nvidia's revenue comes from China, second only to U.S. revenue, according to data firm FactSet.
In its latest earnings release, NVIDIA reported revenue of $35.08 billion, an increase of 94% from $18.12 billion in the year-ago period. Nvidia earned $19.31 billion in the quarter, more than double the $9.24 billion it earned in the third quarter last year. Revenue from China is not broken down in the financial results announcement.
The company's market value recently surged to $3.5 trillion, overtaking Microsoft and briefly surpassing Apple to become the world's most valuable company.
The graphics processor chip (GPU), invented by Nvidia in 1999, fueled the growth of the PC gaming market and redefined computer graphics.
Last month, the Santa Clara, Calif.-based tech giant replaced Intel on the Dow Jones Industrial Average, ending the pioneering semiconductor company's 25-year run on the Dow Jones Industrial Average.
Unlike Intel, Nvidia designs its own chips but does not manufacture them, relying heavily on Intel's rival Taiwan Semiconductor Manufacturing.
China's antitrust investigation follows a report this summer in technology news site The Information that the Justice Department is investigating complaints from competitors that Nvidia is abusing its market power in the chip field. It was carried out subsequently.
Reported allegations include NVIDIA threatening to punish anyone who buys products from both itself and a competitor at the same time.
