Nvidia Denies DOJ Subpoena Amid Market Volatility and Antitrust Concerns

Nvidia Corp (NASDAQ:NVDA), the world’s leading AI chip manufacturer, has found itself at the center of market turbulence and regulatory scrutiny this week. The company’s stock experienced significant volatility following reports of a potential antitrust investigation by the U.S. Department of Justice (DOJ).

Subpoena Denial and Stock Recovery

On Wednesday, Nvidia strongly denied reports that it had received a subpoena from the DOJ as part of an antitrust probe. “We have inquired with the US Department of Justice and have not been subpoenaed,” an Nvidia spokesperson told media outlets. The company added, “Nonetheless, we are happy to answer any questions regulators may have about our business.”

This denial came in response to earlier reports by Bloomberg that Nvidia and other technology companies had been subpoenaed by the DOJ’s San Francisco office. The initial news had triggered a massive sell-off, wiping $278 billion from Nvidia’s market capitalization on Tuesday—its largest one-day loss ever.

Following the company’s statement, Nvidia’s stock saw a slight recovery in after-hours trading, rising 0.46% to $106.70. However, the stock remains down over 17% in the last five trading days, reflecting ongoing investor concerns.

Antitrust Concerns and Market Dominance

Despite Nvidia’s denial of receiving a formal subpoena, reports suggest that the DOJ is indeed looking into the company’s business practices. Regulators are reportedly concerned that Nvidia may be making it difficult for customers to switch to other chip suppliers and potentially penalizing buyers who don’t exclusively use its AI chips.

Nvidia’s dominant position in the AI chip market, with an estimated 70% to 95% market share, has drawn attention from both investors and regulators. The company’s largest customers include tech giants Microsoft, Meta, Amazon, and Google’s parent company Alphabet, with some reportedly allocating up to 40% of their hardware budgets to Nvidia products.

Broader Market Impact

The volatility surrounding Nvidia has had ripple effects across global markets. As the third most valuable company in the world, Nvidia’s stock movements can significantly impact the tech-heavy Nasdaq index. The recent sell-off triggered declines in other tech stocks and affected markets in Asia and Europe.

This market reaction highlights growing investor concerns about the AI sector and the broader economy. Some analysts have questioned whether massive investments in AI technology by major tech companies are justified, given its limited applications outside the tech sector.

Looking Ahead

As Nvidia navigates these regulatory and market challenges, investors will be closely watching for any developments in the potential DOJ investigation and the company’s ability to maintain its market dominance in the AI chip sector.

Despite recent volatility, it’s worth noting that Nvidia’s stock is still up over 120% year-to-date, reflecting the strong demand for AI chips and the company’s central role in the ongoing AI boom.

Nvidia maintains that it “wins on merit, as reflected in our benchmark results and value to customers,” and emphasizes that customers can choose whatever solution is best for them. As the situation unfolds, the company’s ability to address regulatory concerns while continuing to innovate in the AI space will be crucial for its future performance and market position.