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Is NVDA stock at risk? French authorities raid Nvidia’s offices

Is NVDA stock at risk? French authorities raid Nvidia's offices

In 2023, Nvidia (NASDAQ: NVDA) embarked on a remarkable rally, consistently surging to new all-time highs, fueled by unprecedented growth in the artificial intelligence (AI) sector. 

However, although NVDA’s thrilling ascent remains almost intact so far, investors’ attention was turned on September 28 when Nvidia’s company offices found themself at the center of a surprising French police raid. 

What happened?

Notably, France’s competition authority raided Nvidia’s local offices this week on allegations that the tech giant took part in anticompetitive practices, the Wall Street Journal reported on September 28. 

At first, it was unclear which company was targeted by the raid, with the French competition watchdog only disclosing it was the “graphics cards sector.” Later, it was revealed that the target was Nvidia, the biggest manufacturer of AI and computer graphics chips.

The regulator said the raid was part of a broader inquiry into the cloud computing sector, voicing concerns that some of these companies may be taking advantage of their access to computing power to exclude smaller competitors. 

In its report published in June, the French competition authority said the growing use of AI “will drive growth in demand for cloud services,” adding that competition regulators must “ensure that established players do not hinder the development of smaller or new players.” 

As a result of the unprecedented rise of generative AI products – most notably OpenAI’s ChatGPT – demand for Nvidia’s chips went through the roof, leading to a chip crunch. Consequently, Nvidia’s sales skyrocketed, propelling the company’s valuation beyond $1 trillion earlier this year. 

Nvidia stock price analysis

At the time of publication, shares of Nvidia were standing at $430.68, up 1.41% in the past week.

The stock gained over 3.6% in the last week, although it lost around 7.7% on the month.

NVDA 1-month price chart. Source: Finbold

Year-to-date, NVDA’s performance remains remarkable, with a roughly 200% surge.

As NVDA’s stock remains resilient in the premarket, it’s evident that the raid has yet to exert significant selling pressure. 

The situation hinges on the outcome of investigations, with the absence of charges at this stage unlikely to change investor sentiment. 

However, should substantial evidence of anticompetitive actions emerge, Nvidia’s stock could face increased scrutiny and potential repercussions.

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