By Alex Philippidis
An analyst and an influential American investor appeared to hold more sway over the price of Nvidia (NVDA) shares over the past week than French authorities investigating the Silicon Valley-based microprocessing giant with a growing presence in the life sciences, judging by recent stock activity.
Investigators from France’s Autorité de la Concurrence—the French Competition Authority—raided Nvidia’s French offices at dawn on September 27 on suspicion that it may carried out “anticompetitve practices” in the “graphics cards” sector.
The authority’s statement did not spell out the practices being investigated, or the company raided. However, numerous news outlets including Reuters and The Wall Street Journal cited Nvidia by name, after the French business magazine Challenges earlier reported that Nvidia was the target of the raid.
The authority emphasized in a statement that dawn raids like the “unannounced inspection” carried out last week “do not pre-suppose the existence of a breach of the law,” but as a step toward a complete investigation of competitive practices within a given industry.
Nvidia has declined to comment.
Nvidia was not among companies mentioned in a French government report issued June 29 that outlined concerns over a lack of competition in the sector—although the report did mention other companies, such as Amazon Web Services, Google Cloud, and Microsoft Azure.
The authority’s action had no apparent effect on Nvidia shares, which rose 1% the day of the raid, from $419.11 to $424.68. Shares continued to climb 5% through Monday, reaching a high for the week of $447.82 before declining 3%, to $435.17, then rebounding 3% over two days, to $446.88 at the close of trading Thursday.
Monday’s rise came after Toshiya Hari, lead semiconductors sector analyst with Goldman Sachs Research, added Nvidia’s stock to the firm’s “Conviction List” of top picks—although Hari did not change Goldman’s “Buy” rating or 12-month price target of $605 a share.
However, the French raid has led the European Commission to begin “informally” examining potential unfair practices related to the graphics processing units (GPUs) used for artificial intelligence (AI) applications, Bloomberg News reported, citing unnamed sources.
Also on Monday, the influential electronic transfer fund ARK Genomic Revolution ETF (ARKG) had sold 8,983 shares of Nvidia stock, shrinking its holding in the company from 88,223 to 79,240 shares as of Tuesday, according to ARKG’s chart detailing its Nvidia holdings. That stake dipped further when ARKG sold another 499 shares on Wednesday, then another 15,696 shares on Thursday, bringing its stake in Nvidia to 63,045 shares with a total market value of about $28.2 million.
The fund’s ownership in Nvidia carries a “weight” of 1.7% of the 39-company portfolio, according to the website of ARKG parent ARK Investment Management (ARK Invest), whose chief investment officer and portfolio manager is Catherine D. (Cathie) Wood.
ARKG is an electronic transfer fund concentrating on healthcare and other sectors “expected to substantially benefit from extending and enhancing the quality of human and other life.”
Over the past year, ARKG has shed about two-thirds (66.5%) of its 12-month high of 188,160 shares held on November 18, 2022. Since August 24, when ARKG held 134,323 Nvidia shares, the ETF has sold off a combined 71,278 shares in six transactions, including the three that took place this week.
In January another ARK ETF, its flagship ARK Innovation ETF (ARKK), sold off 800,000 Nvidia shares in January—thus missing practically all of the company’s stock surge in the first half of this year, as investors jumped on the AI bandwagon.
As GEN reported in June, Nvidia shares rocketed 180% between January 3 and May 30 (when it finished at $401.11), then climbed another 5.5%, finishing on June 30 at $423.02 or up 196% from $143.15 at the start of 2023 trading on January 3.
“$NVDA is priced ahead of the curve,” Wood posted on Twitter (now X) May 25, when Nvidia’s stock price stood at 25x its expected revenue for this year.
On September 1, Wood promoted an ARK paper about potential opportunities stemming from investment in AI by posting on X her fund’s current thinking—namely that AI growth won’t be limited to giants like Nvidia: “Since 2014, our analysts have been dissecting the AI revolution. While big benchmarks highlight mega tech, we think AI’s true potential lies beyond them in focused, agile companies.”
Demand stays high
CapEdge cited a possible reason why Nvidia shares didn’t dip further this week: Demand for the company’s GPUs remains high despite rising costs reflected in a 16% hike last month in the price of Nvidia’s H100 GPU set by a sales partner, GDEP Advance.
The H100 now costs ¥5.44 million (just over $36,550), up ¥700,000 (about $4,700), according to a report in Nikkei Asia, in which GDEP blamed the price hike on the declining value of the Japanese yen. Another news report pegs the cost of H100 at about $40,000, with Nvidia spending only $3,320 on manufacturing the GPU.
The AI boom explains why this week one analyst raised his firm’s 12-month price target on Nvidia shares: John Vinn, a managing director and senior research analyst covering the semiconductor industry for KeyBanc Capital Markets, increased its target 12%, from $670 to $750, while maintaining KeyBanc’s “Overweight” rating on the stock.
Headquartered in Santa Clara, CA, Nvidia revolutionized gaming by inventing the GPU more than two decades ago. By 2021, as GEN reported, Nvidia doubled down on expanding its presence in AI-based drug discovery through a trio of partnerships.
Earlier this year, Nvidia announced initiatives that included BioNeMo™, a generative AI cloud-based service designed to enable faster discovery and design of drugs; Tokyo-1, in which Nvidia and Mitsui & Co., are partnering to develop Japan’s first generative AI supercomputer for that nation’s pharma industry; and Clara, an AI-based platform used by more than 100 healthcare enterprises worldwide.
And in July, Recursion Pharmaceuticals (RXRX) agreed to accelerate development of its AI foundation models for biology and chemistry by using the cloud services of Nvidia, after it invested $50 million in Recursion.
Leaders & laggards
- ALX Oncology (ALXO) shares surged 56% on Tuesday, from $4.81 to $7.51, after the company announced positive prespecified interim data from its Phase II ASPEN-06 trial (NCT05002127) showing a confirmed overall response rate of 52% for the combination of its CD47 inhibitor evorpacept with Eli Lilly’s Cyramza® (ramucirumab) and paclitaxel, compared to 22% for control treatment. The randomized multi-center international study assessed the combination as a treatment for patients with HER2-positive gastric/gastroesophageal junction (“GEJ”) cancer. ALX said it will release a final analysis from the trial in Q2 2024, and plans to launched the Phase III portion of ASPEN-06 in late 2024.
- Apellis (APLS) shares rose 5% on Thursday, from $37.62 to $39.64, after the company projected preliminary U.S. net revenue of approximately $74 million in the third quarter for its Syfovre® (pegcetacoplan injection) for geographic atrophy (GA) secondary to age-related macular degeneration (AMD), and approximately $160 million from its launch in March through September 30. Apellis said demand has stayed strong, with more than 100,000 vials (commercial and sample) distributed to date. Apellis also reported that growth in week-over-week demand resumed in August following a decline linked to safety concerns that touched off a 73% share price plunge and was cited by a short seller last month.
- Ginkgo Bioworks Holdings (DNA) shares fell 5.5% on Monday, from $1.81 to $1.71, after its Zymergen subsidiary filed for Chapter 11 bankruptcy in U.S. District Court for the District of Delaware. In a regulatory filing, Ginkgo disclosed that it entered into an agreement with Zymergen to be the “stalking horse” bidder to acquire exclusive rights to substantially all of Zymergen’s intellectual property assets and “other assets that are relevant to Ginkgo’s business going forward.” Ginkgo’s bid includes $5 million cash and assumption of up to $77 million of potential future liabilities, including a lease, employee compensation, and severance costs. Ginkgo insisted that it and its other subsidiaries “will continue to operate their businesses as usual.”
- POINT Biopharma Global (PNT) shares nearly doubled, leaping 85% on Tuesday from $6.68 to $12.36 after the radiopharmaceutical drug developer agreed to be acquired by Eli Lilly for approximately $1.4 billion. The company’s pipeline of radioligand therapies to treat cancer is led by two late-phase candidates. One is PNT2002, a prostate-specific membrane antigen targeted radioligand therapy for metastatic castration-resistant prostate cancer (mCRPC) after progression on hormonal treatment, set to release topline data from the Phase III SPLASH trial (NCT04647526) later this quarter. The other is PNT2003, a somatostatin receptor (SSTR) targeted radioligand treatment for gastroenteropancreatic neuroendocrine tumors (GEP-NETs).The deal is expected to close near year’s end, subject to customary closing conditions.
- Nuvalent (NUVL) shares jumped 36% on Wednesday, from $42.42 to $57.51, after the company announced preliminary data from the Phase I dose-escalation portion of its ongoing ALKOVE-1 Phase I/II trial (NCT05384626) assessing NVL-655 in patients with advanced ALK-positive non-small cell lung cancer (NSCLC) and other solid tumors. Data showed partial responses to NVL-655 in 45% of response-evaluable patients with ALK-positive NSCLC who received the drug at doses ranging from 15–150 mg once daily (15 of 33 patients, with eight patients pending confirmation). An objective response rate (ORR) of 65% (11 of 17 patients) was seen in patients with baseline ALK resistance mutations, and an ORR of 41% (12 of 29 patients) was seen patients receiving third-generation ALK tyrosine kinase inhibitor lorlatinib, including cases with compound resistance mutations.
- Standard BioTools (LAB) shares tumbled 22% on Wednesday, from $2.70 to $2.10, after it agreed to merge with SomaLogic (SLGC) in an all-stock deal creating a combined company valued at more than $1 billion, to retain Standard’s name and be run by its CEO Michael Egholm, PhD. The new company expects to generate $80 million in “synergies” by 2026—but will have more than $500 million in estimated cash and cash equivalents upon closing. The deal is set to close in the first quarter of 2024 subject to conditions that include shareholder approval and expiration of the Hart-Scott-Rodino waiting period. Standard (formerly Fluidigm) raised its 2023 revenue guidance to $100–105 million, while SomaLogic reaffirmed its 2023 revenue guidance of $80–84 million. SomaLogic shares fell 10%, from $2.30 to $2.07.
Alex Philippidis is Senior Business Editor of GEN.