The deal followed a competitive bidding process that included rival chipmakers like Intel (NasdaqGS: INTC).

Mellanox, which is based in Israel and the United States, produces semiconductor chips and other hardware for data center servers that power cloud computing.

Bernstein analyst Stacy Rasgon said Nvidia has been expanding into networking and connectivity with its own custom solutions, and Mellanox would provide further expertise in Nvidia’s current businesses.

“But going out and buying an asset right now, immediately after the recent spate of guide downs may raise a few eyebrows,” Rasgon told CNBC. “It will probably spark questions as to whether NVDA sees anything changing regarding the growth trajectory of their core datacenter business.”

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