Key Points:
- DOJ escalates antitrust probe into Nvidia with a subpoena.
- The investigation focuses on Nvidia’s anti-competitive practices in the AI chip market.
- Nvidia shares dropped 9.5% on Tuesday, erasing about $279 billion in market value.
Nvidia is under increasing legal pressure as the U.S. Department of Justice (DOJ) escalates its antitrust investigation, issuing a subpoena to the tech giant. This probe aims to determine whether Nvidia has used its dominant position in the AI chip market to suppress competition, according to a report by Bloomberg.
The investigation is examining claims that Nvidia has made it difficult for customers to switch to alternative suppliers and allegedly penalized those who don’t exclusively use its AI chips. This scrutiny has heightened as Nvidia’s dominance in the AI chip industry has grown, with the company controlling about 80% of the datacenter AI chip market and reporting $30 billion in Q2 2024 revenue.
The DOJ’s subpoena represents a significant escalation in the case, moving beyond earlier questionnaires sent to tech companies, and signals that legal action may be forthcoming.
Nvidia’s Stock Tumbles Amid Antitrust Concerns
The timing of the subpoena coincided with Nvidia’s largest single-day market value loss since 2020. The company’s shares dropped 9.5%, erasing nearly $279 billion in market value. Following the DOJ’s announcement, shares fell an additional 2.5% in after-hours trading, driven by investor concerns over the growing regulatory scrutiny.
Although Nvidia’s stock has surged 141% this year due to the AI boom, the ongoing antitrust investigation could have a significant impact on its market position moving forward.
