Nvidia Purchases Mellanox for $6.9 Billion
Nvidia’s recent acquisition of Mellanox, a networking chipset and technology provider, for $6.9 billion marks a new direction for the company in its biggest acquisition to date. The acquisition shows analysts and stakeholders that its vision of the future ranges outside of just producing graphics cards, instead prioritizing the future of artificial intelligence.
Before the acquisition, Nvidia’s company image was that of gaming, with catering to the high-end graphics card market as its primary mission. However, by purchasing Mellanox, Nvidia CEO Jensen Huang is showing the world that Nvidia is anticipating a cloud-based future, setting the stage for artificial intelligence’s dominance and increased importance of data analytics.
Nvidia and Mellanox have been partners for a very long time, working closely together to lower latencies and build upon each others’ products. This partnership has been very fruitful in the past, but with technology giants like Intel and Microsoft making offers to acquire Mellanox, Nvidia stepped in to prevent its competition from getting stronger and strengthen its own holdings at the same time. By ensuring that the functions of processing and connectivity are under Nvidia’s control and that they work in tandem with one another, Huang is guaranteeing that Nvidia can offer its customers an industry-leading product.
With both Nvidia and Mellanox under the same company, the line between data centers and computing would be increasingly blurred, allowing the two components to work seamlessly together. Mellanox is an early innovator of high-performance interconnect technology, which is now found in over half of the world’s supercomputers and hyperscale data centers. By integrating Mellanox’s data centres with Nvidia’s processing power, there will be a significant reduction of latency, paving the way for a much faster future.
Analysts from The Street say Nvidia’s big bet on the future of AI and data analytics is a valuable long-term move, bringing back the viability of investing in Nvidia’s stock. Last year, investors feared Nvidia’s collapse with its stock dropping about 50 percent in the span of two months. Upon news of the purchase, Nvidia’s stock (NVDA) rose to $161.14, effectively adding $6.3 billion in market capitalization.
Nvidia has made strides towards promoting a future dominated by artificial intelligence, but its acquisition of Mellanox cements its road towards a broader presence in cloud computing.