Nvidia just received good news from Europe as The European Commission approved its acquisition of the Israeli firm Run:ai. The acquisition was announced in April but received a setback when European regulators took notice in October and decided to investigate the merger.
Almost all tech companies continue to be under heavy scrutiny of late as regulators don’t want a handful of companies to take control of global technological development, especially at a time when a sensitive technology like Artificial Intelligence is in the early stages of development. In this particular case, it was the Italian regulators that flagged the buyout, using what they refer to as a ‘killer acquisition’ card (Article 22 of the EU Merger Regulations).
A killer acquisition, according to the commission, is when a large company buys out a smaller company with the intention of shutting down the target company’s innovation or preventing it from becoming a future competitor. This is a complex issue in Europe and one that is likely to be heard more often than before in the future. But for now, Nvidia is safe and can go ahead with the buyout.
The investigation was based on whether the acquisition would disrupt the GPU supply and GPU orchestration software market. As things stand, the startup doesn’t have any significant market share in the orchestration software market. An orchestration software plays the same role as the conductor in an orchestra. It helps manage and automate interactions between various components of a data center, including servers, storage devices, networking equipment, and applications that are running on the data center. The commission also noted that customers will still be able to access the services of Run:ai’s competitors.
Even though the details of the deal were never made public, a rough estimate of the acquisition cost stands at $700 million. Nvidia will now be able to reduce the number of GPUs needed to complete a task by making multiple workloads run in parallel using Run:AI’s software.
Nvidia is 5th on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 193 hedge fund portfolios held NVDA at the end of the third quarter which was 179 in the previous quarter. While we acknowledge the potential of NVDA as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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