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Nvidia Can Live Without Arm


Nvidia’s stand-alone prospects are so rosy these days that losing its biggest deal ever will hardly make a dent.


Robert Galbraith/REUTERS

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NVDA 2.20%

The chip maker’s proposed acquisition of Arm Holdings was never a sure thing. The prospect of a single firm taking control of the vast library of intellectual property that underpins much of the wireless and computing ecosystem was always sure to draw opposition from rivals. An American chip maker taking control of one of Europe’s major tech success stories also was a dicey idea politically; U.K. regulators had been giving the deal a close look. But Nvidia didn’t even benefit from home court advantage: The Federal Trade Commission filed a lawsuit against the deal on Thursday, arguing that the combination could “unfairly undermine Nvidia’s rivals.”

Nvidia said Thursday that “we will continue to work to demonstrate that this transaction will benefit the industry and promote competition.” Many analysts were skeptical of the transaction’s prospects even when it was first announced in September 2020 given the near certainty of government and industry opposition. The market therefore hasn’t ever priced in much certainty of success. Nvidia’s share price—up more than 2% before the FTC’s announcement Thursday afternoon—stayed elevated by the closing bell.

Nvidia’s stand-alone prospects are so rosy these days that losing its biggest deal ever will hardly make a dent. The company was on a tear even before announcing the proposed acquisition thanks to booming demand for both its videogaming processors and the specialized artificial intelligence chips it makes for data centers. Nvidia’s trailing 12-month revenue has gone from about $13 billion when the Arm deal was announced to a little over $24 billion now—an 85% jump in just a little over a year’s time.

Wall Street expects the run to continue, with annual revenue projected to top $30 billion in the next 12 months. Nvidia is considered a major near-term beneficiary of efforts by major tech companies to build out the so-called “metaverse.”


-parent Meta Platforms—a major Nvidia customer—plans to boost its capital expenditures by 66% next year to as much as $34 billion. Analysts project that Nvidia’s data center revenue will jump by 33% for the fiscal year ending January 2023 even following a projected 55% surge in the current fiscal year.

Ironically, Nvidia’s very success might now be working against it. The FTC complaint noted that the chip maker is “one of the world’s largest and most valuable computing companies.” Nvidia’s market cap has exploded this year, more than doubling to its current level just over $800 billion. That has made the chip maker the seventh most valuable company on the S&P 500, ranking just below the other tech titans and above any other non-tech outfit. With lawmakers nearly united on the idea of preventing big tech from getting much bigger, Nvidia should brace itself for more scrutiny from this point on. Being a tech giant these days comes with a large target on one’s back.

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Write to Dan Gallagher at [email protected]

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