Nvidia (NVDA) shares fell 2.5% on Monday after China launched an antitrust investigation into the chipmaker amid rising tensions with the U.S. over artificial intelligence dominance. The probe focuses on potential anti-monopoly violations, including Nvidia's $7 billion acquisition of Israeli networking equipment maker Mellanox in 2020. China’s State Administration for Market Regulation approved the acquisition with conditions to ensure non-discrimination against Chinese companies, which it now believes may have been violated.

An Nvidia spokesperson stated that the company is committed to providing quality products and complying with regulatory commitments, expressing willingness to cooperate with the investigation. The probe follows recent U.S. semiconductor export restrictions aimed at limiting China’s access to advanced AI chips, including high-bandwidth memory chips vital for AI training.

The investigation also coincides with heightened geopolitical tensions, as former President Donald Trump prepares to take office again next month, with promises of increased tariffs on China. Financial analyst Nigel Green described the move as a strategic geopolitical maneuver, signaling China's readiness to counter U.S. actions aggressively.

Despite Nvidia's strong performance in 2024, with a nearly 190% year-to-date gain, the stock has shown limited movement since Trump's election victory, rising just over 1%. This reflects the broader complexities of navigating geopolitical challenges in the semiconductor sector.

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