Arm and Nvidia

Nvidia shares were down slightly at the pre-market on Wednesday following news that a preliminary investigation by UK authorities into Nvidia's deal to buy UK tech giant Arm showed "worrying implications for national security".

Nvidia (NVDA) shares, up 51.8% since the start of 2021, showed a slight decline of 0.4% at Wednesday's pre-market (at the time of writing).

The trigger for the decline was the release of a Bloomberg article a day earlier. The publisher reported that the UK authorities' preliminary investigation into the Nvidia deal to buy UK tech giant Arm reflected concerns about the possible negative impact of such a deal on the country's national security.

Earlier

Also, Nvidia announced its $40bn purchase of Arm from SoftBank back in September 2020.

Nvidia has pledged to preserve the sovereignty of Arm, whose technology is used in virtually every smartphone and millions of other devices around the world. Nvidia has also indicated that Arm will remain headquartered in Cambridge, where Nvidia will build a world-class artificial intelligence (AI) research centre as well as a state-of-the-art AI supercomputer powered by Arm processors.

Concerned about potential monopoly threats and "conflicts of interest" resulting from the deal, executives at major companies such as Google (GOOGL), Qualcomm (QCOM) and Microsoft (MSFT) have applied to US regulators to ban it.

UK authorities on the deal

The UK authorities are currently inclined to ban the deal, but will conduct a deeper review because of national security concerns, according to Bloomberg sources. This heightened concern on the part of authorities about a major merger between two semiconductor companies is due to a greater focus on the technology sector by national governments.

Wall Street and investors on the deal

The rise in Nvidia shares following the announcement of the Arm purchase on 14 September 2020 was moderate, and their decline amid the announcement of the UK investigation on 19 April was replaced by a rise following the 21 May announcement of the share split and a strong quarterly report.

Thus, analysts at two reputable investment firms raised their target prices for Nvidia shares on Tuesday.