Nvidia stock price jumps after closing $7 billion Mellanox acquisition

Written by: Michael Harris
April 28, 2020
  • Nvidia agreed to buy Mellanox in March last year for $125 per share all in cash
  • The deal will boost Nvidia’s data center capacities and help the company to challenge with Intel
  • Stock price hits a 2-month high, trading above the $300 mark for the first time since February

Shares of Nvidia (NASDAQ:NVDA) closed the day 2.59% higher after the tech giant announced the completion of a deal to acquire Mellanox for $7 billion. 

Fundamental analysis: A “home run deal”

Nvidia stock price surged to a 2-month high after the tech giant said it successfully completed the $7 billion takeover of the chip manufacturer Mellanox Technologies.

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“This is a homerun deal. Man, I’ve been dreaming about this,” Nvidia CEO Jensen Huang said to CNBC.

It took Nvidia around 13 months to finalize the deal. Finally, China’s regulators approved the takeover, after their colleagues from the United States and European Union did the same last year.

Nvidia announced in March it agreed to takeover Mellanox for $125 per share in cash.

“Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures. This combination will foster the creation of powerful technology and fantastic opportunities for our people, said Eyal Waldman, founder and CEO of Mellanox, after the takeover was announced.

Mellanox, the Israel-based tech giant, is producing high-performance chips for customers such as Ali Baba and Baidu. With this deal, Nvidia is investing in its data center, high-speed networking and artificial intelligence business. The California-based company is now better equipped to challenge Intel. 

“With that, hopefully we could, you know, accelerate the innovation and create amazing things for data centers going forward,” said Nvidia agreed to buy Mellanox in March last year for $125 per share all in cashHuang.

“We’re combining the leaders of AI computing and high speed networking and data processing into one company and, so, this is really quite extraordinary,” said Huang, who has been in charge of the company since 1993.

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Technical analysis: New 2-month high

Shares of Nvidia closed the day 2.59% higher as the stock price nears the full recovery from the coronavirus-triggered selloff. Despite a major move lower that has seen the stock price correct around 40% from the record highs, Nvidia bulls were successful in pushing the price action above $300 for the first time since February.

Nvidia stock daily chart (TradingView)

The apparent aim for the buyers remains the record high around the $315 handle. On the downside, the price action remains supported by the 100-DMA above $260, a level which provides a solid opportunity to buy Nvidia stock, should there be another pull back.

Summary

Nvidia stock price closed the day more than 2.5% higher after the company successfully closed the deal to purchase the high-performance chip maker Mellanox for $7 billion.