NVIDIA, a leading company in the artificial intelligence (AI) chip sector, experienced a sharp decline in its stock following news that it had received a subpoena from the U.S. Department of Justice (DOJ) regarding potential antitrust violations. The subpoena, part of a broader investigation, contributed to a drop in the semiconductor index below 5,000.
According to Bloomberg, the U.S. Department of Justice (DOJ) sent subpoenas to several chip manufacturers, including NVIDIA, concerning possible antitrust violations.
A subpoena is a legal document that orders the recipient to provide evidence or appear in court. Bloomberg reported that the DOJ is demanding information from these companies as part of the investigation. The issuance of these subpoenas suggests that the DOJ’s investigation is advancing toward a formal indictment.
Sources indicate that antitrust authorities are investigating whether NVIDIA made it difficult for customers to switch to other suppliers and disadvantaging those who do not exclusively use its AI chips.
NVIDIA’s stock had already taken another hit following its second-quarter earnings report, falling further on the news of the antitrust investigation. NVIDIA’s shares closed at $108, down 9.53% from the previous trading day.
The impact extended to other semiconductor companies, with significant stock declines reported. Intel’s stock fell 8.8% to $20.10, Micron Technology dropped 7.96% to $88.58, AMD decreased 7.82% to $136.94, Qualcomm fell 6.88% to $163.24, and Broadcom declined 6.16% to $152.79.
This led to a sharp drop in the Philadelphia Semiconductor Index, which fell 7.75% to 4,759. Concerns about a potential AI bubble further exacerbated the decline.
The downturn also affected the “Magnificent Seven” tech stocks, which include NVIDIA. Alphabet (Google) dropped 3.94% to $158.61, Apple fell 2.72% to $222.77, Microsoft decreased 1.85% to $409.44, Meta fell 1.83% to $511.76, Tesla dropped 1.64% to $210.60, and Amazon decreased 1.26% to $176.25. Despite these declines, NVIDIA’s drop was the most significant.
NVIDIA, which had previously overtaken Intel as a leading chipmaker and seen its quarterly sales more than double, is now under intense scrutiny from regulators.
The DOJ suspects that NVIDIA is developing software to manage AI computing through its recent acquisition of RunAI, making it harder for customers to switch to other chip suppliers. Furthermore, they are investigating whether NVIDIA offers preferential treatment and pricing to customers who exclusively use its technology or purchase complete systems.
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