The US DOJ escalates its antitrust investigation by issuing a subpoena to investigate Nvidia’s dominance in the AI computing market, resulting in a 10% decline in its stock.
Today, Nvidia is one of the most underperforming securities in the US equity market, with a loss of nearly 10% of its value. The stock has experienced a nearly 3% decline following the closing bell, indicating that investors are staying far from the AI colossus stock. In the interim, Bloomberg reported that the US Department of Justice (DOJ) has issued a subpoena to the chipmaker, thereby intensifying its antitrust investigation of the company.
Nvidia Probe Escalated by DOJ Through Subpoena
The United States Department of Justice (DOJ) has escalated its antitrust investigation into Nvidia by issuing subpoenas to the AI processor giant, indicating a new level of scrutiny. In the past, the Department of Justice had distributed questionnaires to chipmakers and other organizations to accumulate preliminary data.
Nevertheless, the most recent subpoenas represent a significant escalation, as they are legally binding requests that obligate the AI behemoth to submit specific evidence regarding the investigation. The DOJ’s inquiry primarily focuses on the chipmaker’s dominance in the AI computing market, as a recent Bloomberg report indicates.
In the interim, the report indicated that antitrust officials are apprehensive about the AI firm’s ability to impede customers’ ability to transfer to alternative suppliers. In addition, it implies that the chipmaker may be imposing penalties on purchasers who do not exclusively utilize its AI processors, thereby erecting obstacles for competitors.
The DOJ’s potential to file a formal complaint against the GPU manufacturer is increased by these allegations, which could have significant repercussions for the company. The investigation is being conducted by the San Francisco office of the Department of Justice, and investigators have been in contact with other technology companies to acquire additional evidence.
This investigation into AI firms, initially disclosed in June, has acquired momentum, thereby increasing the pressure on NVDA stock. Investors are increasingly concerned about regulatory obstacles affecting the company’s market position and future expansion.
NVDA Stock Experience Decline
Nvidia stock experienced a significant decline in response to the Department of Justice’s intensified investigation. On Tuesday, the company’s shares were already negatively affected, experiencing a substantial decline. Investors have been compelled to reevaluate their investments in the chipmaker due to the most recent developments, which have exacerbated the uncertainty.
The NVDA stock was down nearly 3% to $105.81 as of the time of writing, having closed the session at $108, a decrease of 9.53% from its previous close. Nevertheless, the company’s stock has performed exceedingly well this year, more than doubling in value, despite the recent decline, largely due to Nvidia’s robust earnings.
In the interim, the Department of Justice’s apprehensions are centered on the company’s market power and potential influence on competition. Officials suspect the firm’s practices stifling competitors and restricting buyer choices, which would violate antitrust laws.
