Nvidia forecast beats expectations, but $40 billion Arm deal talks taking longer than expected By Reuters

By Stephen Nellis and Chavi Mehta

(Reuters) – Nvidia (NASDAQ:) Corp on Wednesday said that talks with regulators to clear its $40 billion proposed acquisition of British semiconductor technology firm Arm Ltd are taking longer than expected, sending shares down 2% before they rebounded.

The disclosure came as Nvidia, the world’s biggest maker of graphics chips for gamers and artificial intelligence chips for data centers, forecast third-quarter revenue above Wall Street expectations on Wednesday as it benefits from a boom in demand.

But investors have been laser focused on whether Nvidia’s move to acquire Arm will withstand regulatory scrutiny and close by March of next year as Nvidia promised. Arm has long been a neutral supplier of technology throughout the chip industry, and Nvidia competitors such as Qualcomm (NASDAQ:) have objected to having Arm land in the hands of a rival.

In a statement, Nvidia Chief Financial Officer Colette Kress said the company is still confident the deal will close.

“Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognize the benefits of the acquisition to Arm, its licensees, and the industry,” she said.

Nvidia shares dropped 2% in after-hours trading after the news but later pared back the losses to remain nearly flat.

The company estimated current-quarter revenue to be $6.80 billion, plus or minus 2%. Analysts on average had expected $6.53 billion, according to IBES data from Refinitiv.

Nvidia, the world’s most valuable chip design company by market value, has enjoyed a surge in sales of gaming gear during the pandemic as people staying at home look for entertainment.

This has added to strong growth in demand for its artificial intelligence chips, which enable tasks such as image recognition and autonomous driving, and are used in data centers.

Nvidia also beat expectations for second-quarter revenue with a 68% rise to $6.51 billion.